Correlation Between PennantPark Floating and Ingredion Incorporated
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Ingredion Incorporated 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 Ingredion Incorporated 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 Ingredion Incorporated, you can compare the effects of market volatilities on PennantPark Floating and Ingredion Incorporated 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 Ingredion Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Ingredion Incorporated.
Diversification Opportunities for PennantPark Floating and Ingredion Incorporated
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennantPark and Ingredion is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Ingredion Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ingredion Incorporated 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 Ingredion Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ingredion Incorporated has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Ingredion Incorporated go up and down completely randomly.
Pair Corralation between PennantPark Floating and Ingredion Incorporated
Given the investment horizon of 90 days PennantPark Floating is expected to generate 1.59 times less return on investment than Ingredion Incorporated. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.29 times less risky than Ingredion Incorporated. It trades about 0.05 of its potential returns per unit of risk. Ingredion Incorporated is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,386 in Ingredion Incorporated on November 2, 2024 and sell it today you would earn a total of 4,247 from holding Ingredion Incorporated or generate 45.25% 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. Ingredion Incorporated
Performance |
| Timeline |
| PennantPark Floating Rate |
| Ingredion Incorporated |
PennantPark Floating and Ingredion Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Ingredion Incorporated
The main advantage of trading using opposite PennantPark Floating and Ingredion Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Ingredion Incorporated 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 Ingredion Incorporated will offset losses from the drop in Ingredion Incorporated's long position.| PennantPark Floating vs. Gladstone Investment | PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital |
| Ingredion Incorporated vs. Lancaster Colony | Ingredion Incorporated vs. Treehouse Foods | Ingredion Incorporated vs. John B Sanfilippo | Ingredion Incorporated vs. Seneca Foods Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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