Correlation Between PennantPark Floating and CF Industries
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and CF Industries 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 CF Industries 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 CF Industries Holdings, you can compare the effects of market volatilities on PennantPark Floating and CF Industries 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 CF Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and CF Industries.
Diversification Opportunities for PennantPark Floating and CF Industries
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between PennantPark and CF Industries is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and CF Industries Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Industries Holdings 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 CF Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Industries Holdings has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and CF Industries go up and down completely randomly.
Pair Corralation between PennantPark Floating and CF Industries
Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.72 times more return on investment than CF Industries. However, PennantPark Floating Rate is 1.38 times less risky than CF Industries. It trades about 0.04 of its potential returns per unit of risk. CF Industries Holdings is currently generating about 0.0 per unit of risk. If you would invest 915.00 in PennantPark Floating Rate on August 30, 2024 and sell it today you would earn a total of 192.00 from holding PennantPark Floating Rate or generate 20.98% 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. CF Industries Holdings
Performance |
| Timeline |
| PennantPark Floating Rate |
| CF Industries Holdings |
PennantPark Floating and CF Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and CF Industries
The main advantage of trading using opposite PennantPark Floating and CF Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, CF Industries 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 CF Industries will offset losses from the drop in CF Industries' long position.| PennantPark Floating vs. TPG Inc | PennantPark Floating vs. Carlyle Secured Lending | PennantPark Floating vs. Brookfield Corp |
| CF Industries vs. Nutrien | CF Industries vs. Intrepid Potash | CF Industries vs. Corteva | CF Industries vs. FMC Corporation |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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