Correlation Between PennantPark Floating and Cadence Design
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Cadence Design 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 Cadence Design 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 Cadence Design Systems, you can compare the effects of market volatilities on PennantPark Floating and Cadence Design 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 Cadence Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Cadence Design.
Diversification Opportunities for PennantPark Floating and Cadence Design
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennantPark and Cadence is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Cadence Design Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadence Design Systems 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 Cadence Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadence Design Systems has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Cadence Design go up and down completely randomly.
Pair Corralation between PennantPark Floating and Cadence Design
Given the investment horizon of 90 days PennantPark Floating is expected to generate 3.19 times less return on investment than Cadence Design. But when comparing it to its historical volatility, PennantPark Floating Rate is 2.47 times less risky than Cadence Design. It trades about 0.03 of its potential returns per unit of risk. Cadence Design Systems is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 25,993 in Cadence Design Systems on September 3, 2024 and sell it today you would earn a total of 5,034 from holding Cadence Design Systems or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Cadence Design Systems
Performance |
| Timeline |
| PennantPark Floating Rate |
| Cadence Design Systems |
PennantPark Floating and Cadence Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Cadence Design
The main advantage of trading using opposite PennantPark Floating and Cadence Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Cadence Design 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 Cadence Design will offset losses from the drop in Cadence Design's long position.| PennantPark Floating vs. Federated Premier Municipal | PennantPark Floating vs. Blackrock Muniyield | PennantPark Floating vs. Federated Investors B | PennantPark Floating vs. SEI Investments |
| Cadence Design vs. Workday | Cadence Design vs. Salesforce | Cadence Design vs. Intuit Inc | Cadence Design vs. Snowflake |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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