Correlation Between PennantPark Floating and Visa
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Visa 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 Visa 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 Visa Class A, you can compare the effects of market volatilities on PennantPark Floating and Visa 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 Visa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Visa.
Diversification Opportunities for PennantPark Floating and Visa
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Visa is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Visa Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Visa Class A 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 Visa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Visa Class A has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Visa go up and down completely randomly.
Pair Corralation between PennantPark Floating and Visa
Given the investment horizon of 90 days PennantPark Floating is expected to generate 4.91 times less return on investment than Visa. But when comparing it to its historical volatility, PennantPark Floating Rate is 1.12 times less risky than Visa. It trades about 0.05 of its potential returns per unit of risk. Visa Class A is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 31,164 in Visa Class A on November 18, 2024 and sell it today you would earn a total of 4,217 from holding Visa Class A or generate 13.53% 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. Visa Class A
Performance |
| Timeline |
| PennantPark Floating Rate |
| Visa Class A |
PennantPark Floating and Visa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Visa
The main advantage of trading using opposite PennantPark Floating and Visa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Visa 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 Visa will offset losses from the drop in Visa's long position.| PennantPark Floating vs. Horizon Space Acquisition | PennantPark Floating vs. Erayak Power Solution | PennantPark Floating vs. AlphaTime Acquisition Corp | PennantPark Floating vs. Israel Acquisitions Corp |
| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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