Correlation Between PennantPark Floating and OFS Capital
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and OFS Capital 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 OFS Capital 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 OFS Capital Corp, you can compare the effects of market volatilities on PennantPark Floating and OFS Capital 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 OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and OFS Capital.
Diversification Opportunities for PennantPark Floating and OFS Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and OFS is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital 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 OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and OFS Capital go up and down completely randomly.
Pair Corralation between PennantPark Floating and OFS Capital
Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the OFS Capital. In addition to that, PennantPark Floating is 1.37 times more volatile than OFS Capital Corp. It trades about -0.16 of its total potential returns per unit of risk. OFS Capital Corp is currently generating about 0.0 per unit of volatility. If you would invest 815.00 in OFS Capital Corp on August 27, 2024 and sell it today you would earn a total of 0.00 from holding OFS Capital Corp or generate 0.0% 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. OFS Capital Corp
Performance |
| Timeline |
| PennantPark Floating Rate |
| OFS Capital Corp |
PennantPark Floating and OFS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and OFS Capital
The main advantage of trading using opposite PennantPark Floating and OFS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, OFS Capital 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 OFS Capital will offset losses from the drop in OFS Capital'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 |
| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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