Correlation Between Goldman Sachs and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Goldman Sachs 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 Goldman Sachs and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldman Sachs Group and PennantPark Investment, you can compare the effects of market volatilities on Goldman Sachs 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 Goldman Sachs with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and PennantPark Investment.
Diversification Opportunities for Goldman Sachs and PennantPark Investment
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Goldman and PennantPark is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Goldman Sachs 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 Goldman Sachs Group 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 Goldman Sachs i.e., Goldman Sachs and PennantPark Investment go up and down completely randomly.
Pair Corralation between Goldman Sachs and PennantPark Investment
Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 2.35 times more return on investment than PennantPark Investment. However, Goldman Sachs is 2.35 times more volatile than PennantPark Investment. It trades about 0.21 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.02 per unit of risk. If you would invest 51,830 in Goldman Sachs Group on August 23, 2024 and sell it today you would earn a total of 7,781 from holding Goldman Sachs Group or generate 15.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldman Sachs Group vs. PennantPark Investment
Performance |
| Timeline |
| Goldman Sachs Group |
| PennantPark Investment |
Goldman Sachs and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldman Sachs and PennantPark Investment
The main advantage of trading using opposite Goldman Sachs and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs 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.| Goldman Sachs vs. Evercore Partners | Goldman Sachs vs. SCOR PK | Goldman Sachs vs. Aquagold International | Goldman Sachs vs. Small Cap Core |
| PennantPark Investment vs. DWS Municipal Income | PennantPark Investment vs. Blackrock Munivest | PennantPark Investment vs. SEI Investments | PennantPark Investment vs. SCOR PK |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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