Correlation Between Generation Capital and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Generation Capital 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 Generation Capital and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generation Capital and PennantPark Floating Rate, you can compare the effects of market volatilities on Generation Capital 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 Generation Capital with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Capital and PennantPark Floating.
Diversification Opportunities for Generation Capital and PennantPark Floating
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Generation and PennantPark is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital 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 Generation Capital 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 Generation Capital 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 Generation Capital i.e., Generation Capital and PennantPark Floating go up and down completely randomly.
Pair Corralation between Generation Capital and PennantPark Floating
Assuming the 90 days trading horizon Generation Capital is expected to generate 13.37 times less return on investment than PennantPark Floating. But when comparing it to its historical volatility, Generation Capital is 1.95 times less risky than PennantPark Floating. It trades about 0.01 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 28,304 in PennantPark Floating Rate on November 1, 2024 and sell it today you would lose (24,131) from holding PennantPark Floating Rate or give up 85.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generation Capital vs. PennantPark Floating Rate
Performance |
| Timeline |
| Generation Capital |
| PennantPark Floating Rate |
Generation Capital and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generation Capital and PennantPark Floating
The main advantage of trading using opposite Generation Capital and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Capital 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.| Generation Capital vs. EN Shoham Business | Generation Capital vs. Mivtach Shamir | Generation Capital vs. Enlight Renewable Energy | Generation Capital vs. Rani Zim Shopping |
| PennantPark Floating vs. First International Bank | PennantPark Floating vs. Mivtach Shamir | PennantPark Floating vs. Atreyu Capital Markets | PennantPark Floating vs. IDI Insurance |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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