Correlation Between MGIC INVESTMENT and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT 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 MGIC INVESTMENT and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and PennantPark Investment, you can compare the effects of market volatilities on MGIC INVESTMENT 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 MGIC INVESTMENT with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and PennantPark Investment.
Diversification Opportunities for MGIC INVESTMENT and PennantPark Investment
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MGIC and PennantPark is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and MGIC INVESTMENT 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 MGIC 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 MGIC INVESTMENT i.e., MGIC INVESTMENT and PennantPark Investment go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and PennantPark Investment
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 1.26 times less return on investment than PennantPark Investment. But when comparing it to its historical volatility, MGIC INVESTMENT is 2.23 times less risky than PennantPark Investment. It trades about 0.21 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 653.00 in PennantPark Investment on October 24, 2024 and sell it today you would earn a total of 27.00 from holding PennantPark Investment or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. PennantPark Investment
Performance |
| Timeline |
| MGIC INVESTMENT |
| PennantPark Investment |
MGIC INVESTMENT and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and PennantPark Investment
The main advantage of trading using opposite MGIC INVESTMENT and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT 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.| MGIC INVESTMENT vs. Westinghouse Air Brake | MGIC INVESTMENT vs. CompuGroup Medical SE | MGIC INVESTMENT vs. CHINA SOUTHN AIR H | MGIC INVESTMENT vs. Fair Isaac Corp |
| PennantPark Investment vs. CITY OFFICE REIT | PennantPark Investment vs. CAL MAINE FOODS | PennantPark Investment vs. THAI BEVERAGE | PennantPark Investment vs. Molson Coors Beverage |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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