Correlation Between PennantPark Floating and Anheuser Busch
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Anheuser Busch 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 Anheuser Busch 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 Anheuser Busch Inbev, you can compare the effects of market volatilities on PennantPark Floating and Anheuser Busch 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 Anheuser Busch. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Anheuser Busch.
Diversification Opportunities for PennantPark Floating and Anheuser Busch
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PennantPark and Anheuser is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Anheuser Busch Inbev in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anheuser Busch Inbev 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 Anheuser Busch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anheuser Busch Inbev has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Anheuser Busch go up and down completely randomly.
Pair Corralation between PennantPark Floating and Anheuser Busch
Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the Anheuser Busch. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Floating Rate is 1.53 times less risky than Anheuser Busch. The stock trades about 0.0 of its potential returns per unit of risk. The Anheuser Busch Inbev is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 4,999 in Anheuser Busch Inbev on November 28, 2024 and sell it today you would earn a total of 873.00 from holding Anheuser Busch Inbev or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Anheuser Busch Inbev
Performance |
| Timeline |
| PennantPark Floating Rate |
| Anheuser Busch Inbev |
PennantPark Floating and Anheuser Busch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Anheuser Busch
The main advantage of trading using opposite PennantPark Floating and Anheuser Busch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Anheuser Busch 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 Anheuser Busch will offset losses from the drop in Anheuser Busch'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 |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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