Correlation Between PennantPark Floating and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Monster Beverage 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 Monster Beverage 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 Monster Beverage Corp, you can compare the effects of market volatilities on PennantPark Floating and Monster Beverage 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 Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Monster Beverage.
Diversification Opportunities for PennantPark Floating and Monster Beverage
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PennantPark and Monster is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp 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 Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Monster Beverage go up and down completely randomly.
Pair Corralation between PennantPark Floating and Monster Beverage
Given the investment horizon of 90 days PennantPark Floating is expected to generate 3.84 times less return on investment than Monster Beverage. But when comparing it to its historical volatility, PennantPark Floating Rate is 3.26 times less risky than Monster Beverage. It trades about 0.11 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,230 in Monster Beverage Corp on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Monster Beverage Corp or generate 5.41% 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. Monster Beverage Corp
Performance |
| Timeline |
| PennantPark Floating Rate |
| Monster Beverage Corp |
PennantPark Floating and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Monster Beverage
The main advantage of trading using opposite PennantPark Floating and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Monster Beverage 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 Monster Beverage will offset losses from the drop in Monster Beverage'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 |
| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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