Correlation Between Cornerstone Strategic and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Cornerstone Strategic and PennantPark Floating 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 Cornerstone Strategic and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornerstone Strategic Return and PennantPark Floating Rate, you can compare the effects of market volatilities on Cornerstone Strategic and PennantPark Floating 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 Cornerstone Strategic with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornerstone Strategic and PennantPark Floating.
Diversification Opportunities for Cornerstone Strategic and PennantPark Floating
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cornerstone and PennantPark is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cornerstone Strategic Return and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Cornerstone Strategic 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 Cornerstone Strategic Return are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Cornerstone Strategic i.e., Cornerstone Strategic and PennantPark Floating go up and down completely randomly.
Pair Corralation between Cornerstone Strategic and PennantPark Floating
Considering the 90-day investment horizon Cornerstone Strategic Return is expected to generate 1.27 times more return on investment than PennantPark Floating. However, Cornerstone Strategic is 1.27 times more volatile than PennantPark Floating Rate. It trades about 0.37 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about -0.14 per unit of risk. If you would invest 830.00 in Cornerstone Strategic Return on August 26, 2024 and sell it today you would earn a total of 71.00 from holding Cornerstone Strategic Return or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornerstone Strategic Return vs. PennantPark Floating Rate
Performance |
| Timeline |
| Cornerstone Strategic |
| PennantPark Floating Rate |
Cornerstone Strategic and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornerstone Strategic and PennantPark Floating
The main advantage of trading using opposite Cornerstone Strategic and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornerstone Strategic position performs unexpectedly, PennantPark Floating 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 Floating will offset losses from the drop in PennantPark Floating's long position.The idea behind Cornerstone Strategic Return and PennantPark Floating Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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