Correlation Between PennantPark Floating and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Hanover Insurance 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 Hanover Insurance 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 The Hanover Insurance, you can compare the effects of market volatilities on PennantPark Floating and Hanover Insurance 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 Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Hanover Insurance.
Diversification Opportunities for PennantPark Floating and Hanover Insurance
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PennantPark and Hanover is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Hanover Insurance go up and down completely randomly.
Pair Corralation between PennantPark Floating and Hanover Insurance
Given the investment horizon of 90 days PennantPark Floating is expected to generate 16.29 times less return on investment than Hanover Insurance. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.54 times less risky than Hanover Insurance. It trades about 0.01 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 14,613 in The Hanover Insurance on August 30, 2024 and sell it today you would earn a total of 1,814 from holding The Hanover Insurance or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Floating Rate vs. The Hanover Insurance
Performance |
| Timeline |
| PennantPark Floating Rate |
| Hanover Insurance |
PennantPark Floating and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Hanover Insurance
The main advantage of trading using opposite PennantPark Floating and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance's long position.| PennantPark Floating vs. Horizon Technology Finance | PennantPark Floating vs. Stellus Capital Investment | PennantPark Floating vs. Prospect Capital | PennantPark Floating vs. Ares Capital |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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