Correlation Between Western Asset and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and PennantPark Investment, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and PennantPark Investment.
Diversification Opportunities for Western Asset and PennantPark Investment
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and PennantPark is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Western Asset 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 Western Asset Investment 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 Western Asset i.e., Western Asset and PennantPark Investment go up and down completely randomly.
Pair Corralation between Western Asset and PennantPark Investment
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the PennantPark Investment. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 2.49 times less risky than PennantPark Investment. The stock trades about -0.05 of its potential returns per unit of risk. The PennantPark Investment is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 690.00 in PennantPark Investment on August 24, 2024 and sell it today you would earn a total of 4.00 from holding PennantPark Investment or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Asset Investment vs. PennantPark Investment
Performance |
| Timeline |
| Western Asset Investment |
| PennantPark Investment |
Western Asset and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and PennantPark Investment
The main advantage of trading using opposite Western Asset and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
| PennantPark Investment vs. Sixth Street Specialty | PennantPark Investment vs. New Mountain Finance | PennantPark Investment vs. Carlyle Secured Lending | PennantPark Investment vs. BlackRock TCP 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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