Correlation Between PennantPark Floating and Aegon NV
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Aegon NV 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 Aegon NV 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 Aegon NV ADR, you can compare the effects of market volatilities on PennantPark Floating and Aegon NV 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 Aegon NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Aegon NV.
Diversification Opportunities for PennantPark Floating and Aegon NV
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Aegon is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Aegon NV ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegon NV ADR 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 Aegon NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegon NV ADR has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Aegon NV go up and down completely randomly.
Pair Corralation between PennantPark Floating and Aegon NV
Given the investment horizon of 90 days PennantPark Floating is expected to generate 1.16 times less return on investment than Aegon NV. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.58 times less risky than Aegon NV. It trades about 0.05 of its potential returns per unit of risk. Aegon NV ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 463.00 in Aegon NV ADR on November 27, 2024 and sell it today you would earn a total of 135.00 from holding Aegon NV ADR or generate 29.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Aegon NV ADR
Performance |
| Timeline |
| PennantPark Floating Rate |
| Aegon NV ADR |
PennantPark Floating and Aegon NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Aegon NV
The main advantage of trading using opposite PennantPark Floating and Aegon NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Aegon NV 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 Aegon NV will offset losses from the drop in Aegon NV's long position.| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital |
| Aegon NV vs. Hartford Financial Services | Aegon NV vs. Goosehead Insurance | Aegon NV vs. International General Insurance | Aegon NV vs. Enstar Group Limited |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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