Correlation Between BTB Real and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both BTB Real and PennantPark Investment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BTB Real and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTB Real Estate and PennantPark Investment, you can compare the effects of market volatilities on BTB Real and PennantPark Investment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BTB Real with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTB Real and PennantPark Investment.
Diversification Opportunities for BTB Real and PennantPark Investment
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BTB and PennantPark is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and BTB Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BTB Real Estate are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of BTB Real i.e., BTB Real and PennantPark Investment go up and down completely randomly.
Pair Corralation between BTB Real and PennantPark Investment
Assuming the 90 days horizon BTB Real is expected to generate 2.74 times less return on investment than PennantPark Investment. But when comparing it to its historical volatility, BTB Real Estate is 2.28 times less risky than PennantPark Investment. It trades about 0.11 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 656.00 in PennantPark Investment on September 3, 2024 and sell it today you would earn a total of 21.00 from holding PennantPark Investment or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BTB Real Estate vs. PennantPark Investment
Performance |
| Timeline |
| BTB Real Estate |
| PennantPark Investment |
BTB Real and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BTB Real and PennantPark Investment
The main advantage of trading using opposite BTB Real and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTB Real position performs unexpectedly, PennantPark Investment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| BTB Real vs. City Office | BTB Real vs. Vornado Realty Trust | BTB Real vs. Cousins Properties Incorporated | BTB Real vs. Highwoods Properties |
| PennantPark Investment vs. Sixth Street Specialty | PennantPark Investment vs. New Mountain Finance | PennantPark Investment vs. Carlyle Secured Lending | PennantPark Investment vs. BlackRock TCP Capital |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.
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