Correlation Between TAL Education and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both TAL Education 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 TAL Education and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and PennantPark Investment, you can compare the effects of market volatilities on TAL Education 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 TAL Education with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and PennantPark Investment.
Diversification Opportunities for TAL Education and PennantPark Investment
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between TAL and PennantPark is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education Group and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and TAL Education 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 TAL Education 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 TAL Education i.e., TAL Education and PennantPark Investment go up and down completely randomly.
Pair Corralation between TAL Education and PennantPark Investment
Assuming the 90 days trading horizon TAL Education Group is expected to generate 2.69 times more return on investment than PennantPark Investment. However, TAL Education is 2.69 times more volatile than PennantPark Investment. It trades about 0.01 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.03 per unit of risk. If you would invest 955.00 in TAL Education Group on September 19, 2024 and sell it today you would lose (35.00) from holding TAL Education Group or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. PennantPark Investment
Performance |
| Timeline |
| TAL Education Group |
| PennantPark Investment |
TAL Education and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and PennantPark Investment
The main advantage of trading using opposite TAL Education and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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.| TAL Education vs. REVO INSURANCE SPA | TAL Education vs. QBE Insurance Group | TAL Education vs. Elmos Semiconductor SE | TAL Education vs. Goosehead Insurance |
| PennantPark Investment vs. Ameriprise Financial | PennantPark Investment vs. Ares Management Corp | PennantPark Investment vs. Superior Plus Corp | PennantPark Investment vs. SIVERS SEMICONDUCTORS AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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