Correlation Between Diamond Hill and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Diamond Hill 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 Diamond Hill and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Hill Investment and PennantPark Floating Rate, you can compare the effects of market volatilities on Diamond Hill 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 Diamond Hill with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Hill and PennantPark Floating.
Diversification Opportunities for Diamond Hill and PennantPark Floating
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and PennantPark is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Hill Investment 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 Diamond Hill 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 Diamond Hill Investment 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 Diamond Hill i.e., Diamond Hill and PennantPark Floating go up and down completely randomly.
Pair Corralation between Diamond Hill and PennantPark Floating
Given the investment horizon of 90 days Diamond Hill Investment is expected to under-perform the PennantPark Floating. In addition to that, Diamond Hill is 1.54 times more volatile than PennantPark Floating Rate. It trades about -0.12 of its total potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.15 per unit of volatility. If you would invest 1,089 in PennantPark Floating Rate on November 2, 2024 and sell it today you would earn a total of 28.00 from holding PennantPark Floating Rate or generate 2.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamond Hill Investment vs. PennantPark Floating Rate
Performance |
| Timeline |
| Diamond Hill Investment |
| PennantPark Floating Rate |
Diamond Hill and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Hill and PennantPark Floating
The main advantage of trading using opposite Diamond Hill and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Hill 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.| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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