Correlation Between Main Street and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Main Street 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 Main Street and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and PennantPark Floating Rate, you can compare the effects of market volatilities on Main Street 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 Main Street with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and PennantPark Floating.
Diversification Opportunities for Main Street and PennantPark Floating
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Main and PennantPark is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital 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 Main Street 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 Main Street Capital 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 Main Street i.e., Main Street and PennantPark Floating go up and down completely randomly.
Pair Corralation between Main Street and PennantPark Floating
Given the investment horizon of 90 days Main Street Capital is expected to generate 1.07 times more return on investment than PennantPark Floating. However, Main Street is 1.07 times more volatile than PennantPark Floating Rate. It trades about 0.14 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.03 per unit of risk. If you would invest 4,291 in Main Street Capital on August 27, 2024 and sell it today you would earn a total of 1,106 from holding Main Street Capital or generate 25.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. PennantPark Floating Rate
Performance |
| Timeline |
| Main Street Capital |
| PennantPark Floating Rate |
Main Street and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and PennantPark Floating
The main advantage of trading using opposite Main Street and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street 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.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| PennantPark Floating vs. PowerUp Acquisition Corp | PennantPark Floating vs. Aurora Innovation | PennantPark Floating vs. HUMANA INC | PennantPark Floating vs. Aquagold International |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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