Correlation Between NRG Energy and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both NRG Energy 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 NRG Energy and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and PennantPark Floating Rate, you can compare the effects of market volatilities on NRG Energy 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 NRG Energy with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and PennantPark Floating.
Diversification Opportunities for NRG Energy and PennantPark Floating
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NRG and PennantPark is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy 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 NRG Energy 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 NRG Energy 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 NRG Energy i.e., NRG Energy and PennantPark Floating go up and down completely randomly.
Pair Corralation between NRG Energy and PennantPark Floating
Considering the 90-day investment horizon NRG Energy is expected to generate 4.57 times more return on investment than PennantPark Floating. However, NRG Energy is 4.57 times more volatile than PennantPark Floating Rate. It trades about 0.2 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.02 per unit of risk. If you would invest 8,999 in NRG Energy on September 1, 2024 and sell it today you would earn a total of 1,162 from holding NRG Energy or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. PennantPark Floating Rate
Performance |
| Timeline |
| NRG Energy |
| PennantPark Floating Rate |
NRG Energy and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and PennantPark Floating
The main advantage of trading using opposite NRG Energy and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy 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.| NRG Energy vs. Pampa Energia SA | NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Power Assets Holdings |
| PennantPark Floating vs. Visa Class A | PennantPark Floating vs. Diamond Hill Investment | PennantPark Floating vs. Distoken Acquisition | PennantPark Floating vs. Associated Capital Group |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |