Correlation Between PennantPark Floating and Davis Commodities
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Davis Commodities 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 Davis Commodities 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 Davis Commodities Limited, you can compare the effects of market volatilities on PennantPark Floating and Davis Commodities 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 Davis Commodities. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Davis Commodities.
Diversification Opportunities for PennantPark Floating and Davis Commodities
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between PennantPark and Davis is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Davis Commodities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davis Commodities 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 Davis Commodities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davis Commodities has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Davis Commodities go up and down completely randomly.
Pair Corralation between PennantPark Floating and Davis Commodities
Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.12 times more return on investment than Davis Commodities. However, PennantPark Floating Rate is 8.42 times less risky than Davis Commodities. It trades about 0.06 of its potential returns per unit of risk. Davis Commodities Limited is currently generating about -0.02 per unit of risk. If you would invest 932.00 in PennantPark Floating Rate on September 2, 2024 and sell it today you would earn a total of 184.00 from holding PennantPark Floating Rate or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 81.72% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Davis Commodities Limited
Performance |
| Timeline |
| PennantPark Floating Rate |
| Davis Commodities |
PennantPark Floating and Davis Commodities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Davis Commodities
The main advantage of trading using opposite PennantPark Floating and Davis Commodities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Davis Commodities 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 Davis Commodities will offset losses from the drop in Davis Commodities' long position.| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital |
| Davis Commodities vs. SunLink Health Systems | Davis Commodities vs. Visteon Corp | Davis Commodities vs. Adient PLC | Davis Commodities vs. Amgen Inc |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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