Correlation Between PennantPark Floating and Herc Holdings
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Herc Holdings 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 Herc Holdings 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 Herc Holdings, you can compare the effects of market volatilities on PennantPark Floating and Herc Holdings 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 Herc Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Herc Holdings.
Diversification Opportunities for PennantPark Floating and Herc Holdings
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennantPark and Herc is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Herc Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herc 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 Herc Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herc Holdings has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Herc Holdings go up and down completely randomly.
Pair Corralation between PennantPark Floating and Herc Holdings
Given the investment horizon of 90 days PennantPark Floating is expected to generate 14.88 times less return on investment than Herc Holdings. But when comparing it to its historical volatility, PennantPark Floating Rate is 3.31 times less risky than Herc Holdings. It trades about 0.03 of its potential returns per unit of risk. Herc Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 13,530 in Herc Holdings on September 2, 2024 and sell it today you would earn a total of 9,670 from holding Herc Holdings or generate 71.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. Herc Holdings
Performance |
| Timeline |
| PennantPark Floating Rate |
| Herc Holdings |
PennantPark Floating and Herc Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Herc Holdings
The main advantage of trading using opposite PennantPark Floating and Herc Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Herc Holdings 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 Herc Holdings will offset losses from the drop in Herc Holdings' long position.| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital |
| Herc Holdings vs. McGrath RentCorp | Herc Holdings vs. Alta Equipment Group | Herc Holdings vs. Custom Truck One | Herc Holdings vs. GATX 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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