Correlation Between PennantPark Floating and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Scandinavian Tobacco 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 Scandinavian Tobacco 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 Scandinavian Tobacco Group, you can compare the effects of market volatilities on PennantPark Floating and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Scandinavian Tobacco.
Diversification Opportunities for PennantPark Floating and Scandinavian Tobacco
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and Scandinavian is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between PennantPark Floating and Scandinavian Tobacco
Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 0.55 times more return on investment than Scandinavian Tobacco. However, PennantPark Floating Rate is 1.82 times less risky than Scandinavian Tobacco. It trades about 0.02 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.28 per unit of risk. If you would invest 1,105 in PennantPark Floating Rate on August 31, 2024 and sell it today you would earn a total of 2.00 from holding PennantPark Floating Rate or generate 0.18% 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. Scandinavian Tobacco Group
Performance |
| Timeline |
| PennantPark Floating Rate |
| Scandinavian Tobacco |
PennantPark Floating and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Scandinavian Tobacco
The main advantage of trading using opposite PennantPark Floating and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.| PennantPark Floating vs. Ares Capital | PennantPark Floating vs. Hercules Capital | PennantPark Floating vs. Main Street Capital |
| Scandinavian Tobacco vs. Universal | Scandinavian Tobacco vs. Imperial Brands PLC | Scandinavian Tobacco vs. Japan Tobacco ADR | Scandinavian Tobacco vs. Philip Morris 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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