Correlation Between PennantPark Floating and Federated Premier
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Federated Premier 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 Federated Premier 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 Federated Premier Municipal, you can compare the effects of market volatilities on PennantPark Floating and Federated Premier 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 Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Federated Premier.
Diversification Opportunities for PennantPark Floating and Federated Premier
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Federated is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Federated Premier go up and down completely randomly.
Pair Corralation between PennantPark Floating and Federated Premier
Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 2.07 times more return on investment than Federated Premier. However, PennantPark Floating is 2.07 times more volatile than Federated Premier Municipal. It trades about 0.03 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.05 per unit of risk. If you would invest 922.00 in PennantPark Floating Rate on September 4, 2024 and sell it today you would earn a total of 177.00 from holding PennantPark Floating Rate or generate 19.2% 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. Federated Premier Municipal
Performance |
| Timeline |
| PennantPark Floating Rate |
| Federated Premier |
PennantPark Floating and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Federated Premier
The main advantage of trading using opposite PennantPark Floating and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.| PennantPark Floating vs. Visa Class A | PennantPark Floating vs. Diamond Hill Investment | PennantPark Floating vs. Associated Capital Group | PennantPark Floating vs. Brookfield Corp |
| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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