Correlation Between GMO Internet and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both GMO Internet 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 GMO Internet and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and PennantPark Investment, you can compare the effects of market volatilities on GMO Internet 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 GMO Internet with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and PennantPark Investment.
Diversification Opportunities for GMO Internet and PennantPark Investment
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GMO and PennantPark is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and GMO Internet 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 GMO Internet 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 GMO Internet i.e., GMO Internet and PennantPark Investment go up and down completely randomly.
Pair Corralation between GMO Internet and PennantPark Investment
Assuming the 90 days horizon GMO Internet is expected to generate 3.79 times more return on investment than PennantPark Investment. However, GMO Internet is 3.79 times more volatile than PennantPark Investment. It trades about 0.07 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.07 per unit of risk. If you would invest 261.00 in GMO Internet on October 16, 2024 and sell it today you would earn a total of 1,329 from holding GMO Internet or generate 509.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GMO Internet vs. PennantPark Investment
Performance |
| Timeline |
| GMO Internet |
| PennantPark Investment |
GMO Internet and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and PennantPark Investment
The main advantage of trading using opposite GMO Internet and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet 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.| GMO Internet vs. Jacquet Metal Service | GMO Internet vs. OURGAME INTHOLDL 00005 | GMO Internet vs. Hochschild Mining plc | GMO Internet vs. GameStop Corp |
| PennantPark Investment vs. Rocket Internet SE | PennantPark Investment vs. Zoom Video Communications | PennantPark Investment vs. GMO Internet | PennantPark Investment vs. Ribbon Communications |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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