Correlation Between KeyCorp and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both KeyCorp 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 KeyCorp and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and PennantPark Floating Rate, you can compare the effects of market volatilities on KeyCorp 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 KeyCorp with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and PennantPark Floating.
Diversification Opportunities for KeyCorp and PennantPark Floating
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KeyCorp and PennantPark is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp 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 KeyCorp 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 KeyCorp 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 KeyCorp i.e., KeyCorp and PennantPark Floating go up and down completely randomly.
Pair Corralation between KeyCorp and PennantPark Floating
Assuming the 90 days trading horizon KeyCorp is expected to generate 1.21 times more return on investment than PennantPark Floating. However, KeyCorp is 1.21 times more volatile than PennantPark Floating Rate. It trades about 0.07 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.05 per unit of risk. If you would invest 2,100 in KeyCorp on November 5, 2024 and sell it today you would earn a total of 361.00 from holding KeyCorp or generate 17.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. PennantPark Floating Rate
Performance |
| Timeline |
| KeyCorp |
| PennantPark Floating Rate |
KeyCorp and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and PennantPark Floating
The main advantage of trading using opposite KeyCorp and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp 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.The idea behind KeyCorp and PennantPark Floating Rate pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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