Correlation Between PennantPark Floating and Dow Jones
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Dow Jones 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 PennantPark Floating and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Floating Rate and Dow Jones Industrial, you can compare the effects of market volatilities on PennantPark Floating and Dow Jones 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 PennantPark Floating with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Dow Jones.
Diversification Opportunities for PennantPark Floating and Dow Jones
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PennantPark and Dow is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and PennantPark Floating 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 PennantPark Floating Rate are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Dow Jones go up and down completely randomly.
Pair Corralation between PennantPark Floating and Dow Jones
Assuming the 90 days trading horizon PennantPark Floating Rate is expected to generate 11.55 times more return on investment than Dow Jones. However, PennantPark Floating is 11.55 times more volatile than Dow Jones Industrial. It trades about 0.06 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 52,403 in PennantPark Floating Rate on August 31, 2024 and sell it today you would lose (48,230) from holding PennantPark Floating Rate or give up 92.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 77.81% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Dow Jones Industrial
Performance |
| Timeline |
PennantPark Floating and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
PennantPark Floating Rate
Pair trading matchups for PennantPark Floating
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with PennantPark Floating and Dow Jones
The main advantage of trading using opposite PennantPark Floating and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| PennantPark Floating vs. Generation Capital | PennantPark Floating vs. Meitav Dash Investments | PennantPark Floating vs. IBI Inv House | PennantPark Floating vs. Mivtach Shamir |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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