Correlation Between PennantPark Floating and Invesco Trust
Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Invesco Trust 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 Invesco Trust 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 Invesco Trust For, you can compare the effects of market volatilities on PennantPark Floating and Invesco Trust 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 Invesco Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Invesco Trust.
Diversification Opportunities for PennantPark Floating and Invesco Trust
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Invesco is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Invesco Trust For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Trust For 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 Invesco Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Trust For has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Invesco Trust go up and down completely randomly.
Pair Corralation between PennantPark Floating and Invesco Trust
Given the investment horizon of 90 days PennantPark Floating Rate is expected to generate 2.07 times more return on investment than Invesco Trust. However, PennantPark Floating is 2.07 times more volatile than Invesco Trust For. It trades about 0.03 of its potential returns per unit of risk. Invesco Trust For is currently generating about 0.05 per unit of risk. If you would invest 922.00 in PennantPark Floating Rate on August 24, 2024 and sell it today you would earn a total of 185.00 from holding PennantPark Floating Rate or generate 20.07% 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. Invesco Trust For
Performance |
| Timeline |
| PennantPark Floating Rate |
| Invesco Trust For |
PennantPark Floating and Invesco Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Floating and Invesco Trust
The main advantage of trading using opposite PennantPark Floating and Invesco Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, Invesco Trust 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 Invesco Trust will offset losses from the drop in Invesco Trust'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 |
| Invesco Trust vs. Pimco New York | Invesco Trust vs. Pimco New York | Invesco Trust vs. BlackRock New York | Invesco Trust vs. Invesco California Value |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |