Correlation Between PennantPark Floating and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Prospect 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 Prospect 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 Prospect Capital, you can compare the effects of market volatilities on PennantPark Floating and Prospect 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 Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Prospect Capital.
Diversification Opportunities for PennantPark Floating and Prospect Capital
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and Prospect is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital 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 Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Prospect Capital go up and down completely randomly.
Pair Corralation between PennantPark Floating and Prospect Capital
Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.52 times more return on investment than Prospect Capital. However, PennantPark Floating Rate is 1.92 times less risky than Prospect Capital. It trades about 0.03 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.01 per unit of risk. If you would invest 1,054 in PennantPark Floating Rate on August 27, 2024 and sell it today you would earn a total of 53.00 from holding PennantPark Floating Rate or generate 5.03% 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. Prospect Capital
Performance |
| Timeline |
| PennantPark Floating Rate |
| Prospect Capital |
PennantPark Floating and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Prospect Capital
The main advantage of trading using opposite PennantPark Floating and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Prospect 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.| PennantPark Floating vs. PowerUp Acquisition Corp | PennantPark Floating vs. Aurora Innovation | PennantPark Floating vs. HUMANA INC | PennantPark Floating vs. Aquagold International |
| Prospect Capital vs. PowerUp Acquisition Corp | Prospect Capital vs. Aurora Innovation | Prospect Capital vs. HUMANA INC | Prospect Capital vs. Aquagold International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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