Correlation Between PennantPark Floating and MGIC Investment
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and MGIC Investment 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 MGIC Investment 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 MGIC Investment Corp, you can compare the effects of market volatilities on PennantPark Floating and MGIC Investment 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 MGIC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and MGIC Investment.
Diversification Opportunities for PennantPark Floating and MGIC Investment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and MGIC is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and MGIC Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGIC Investment 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 MGIC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGIC Investment Corp has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and MGIC Investment go up and down completely randomly.
Pair Corralation between PennantPark Floating and MGIC Investment
Given the investment horizon of 90 days PennantPark Floating is expected to generate 6.01 times less return on investment than MGIC Investment. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.6 times less risky than MGIC Investment. It trades about 0.03 of its potential returns per unit of risk. MGIC Investment Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,092 in MGIC Investment Corp on September 2, 2024 and sell it today you would earn a total of 534.00 from holding MGIC Investment Corp or generate 25.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. MGIC Investment Corp
Performance |
| Timeline |
| PennantPark Floating Rate |
| MGIC Investment Corp |
PennantPark Floating and MGIC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and MGIC Investment
The main advantage of trading using opposite PennantPark Floating and MGIC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, MGIC Investment 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 MGIC Investment will offset losses from the drop in MGIC Investment'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 |
| MGIC Investment vs. MBIA Inc | MGIC Investment vs. Assured Guaranty | MGIC Investment vs. Employers Holdings | MGIC Investment vs. James River Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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