Correlation Between AGRICULTBK HADR25 and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 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 AGRICULTBK HADR25 and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and PennantPark Investment, you can compare the effects of market volatilities on AGRICULTBK HADR25 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 AGRICULTBK HADR25 with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and PennantPark Investment.
Diversification Opportunities for AGRICULTBK HADR25 and PennantPark Investment
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGRICULTBK and PennantPark is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC 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 AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and PennantPark Investment go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR25 and PennantPark Investment
Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 1.11 times more return on investment than PennantPark Investment. However, AGRICULTBK HADR25 is 1.11 times more volatile than PennantPark Investment. It trades about 0.14 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.12 per unit of risk. If you would invest 1,020 in AGRICULTBK HADR25 YC on August 30, 2024 and sell it today you would earn a total of 130.00 from holding AGRICULTBK HADR25 YC or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.73% |
| Values | Daily Returns |
AGRICULTBK HADR25 YC vs. PennantPark Investment
Performance |
| Timeline |
| AGRICULTBK HADR25 |
| PennantPark Investment |
AGRICULTBK HADR25 and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICULTBK HADR25 and PennantPark Investment
The main advantage of trading using opposite AGRICULTBK HADR25 and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 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.| AGRICULTBK HADR25 vs. Methode Electronics | AGRICULTBK HADR25 vs. ELECTRONIC ARTS | AGRICULTBK HADR25 vs. METHODE ELECTRONICS | AGRICULTBK HADR25 vs. Verizon Communications |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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