Correlation Between Playtech Plc and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Playtech Plc and PennantPark Investment 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 Playtech Plc and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playtech plc and PennantPark Investment, you can compare the effects of market volatilities on Playtech Plc and PennantPark Investment 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 Playtech Plc with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playtech Plc and PennantPark Investment.
Diversification Opportunities for Playtech Plc and PennantPark Investment
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Playtech and PennantPark is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Playtech plc and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Playtech Plc 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 Playtech plc are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Playtech Plc i.e., Playtech Plc and PennantPark Investment go up and down completely randomly.
Pair Corralation between Playtech Plc and PennantPark Investment
Assuming the 90 days trading horizon Playtech Plc is expected to generate 1.2 times less return on investment than PennantPark Investment. In addition to that, Playtech Plc is 1.03 times more volatile than PennantPark Investment. It trades about 0.05 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.06 per unit of volatility. If you would invest 402.00 in PennantPark Investment on September 3, 2024 and sell it today you would earn a total of 230.00 from holding PennantPark Investment or generate 57.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Playtech plc vs. PennantPark Investment
Performance |
| Timeline |
| Playtech plc |
| PennantPark Investment |
Playtech Plc and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playtech Plc and PennantPark Investment
The main advantage of trading using opposite Playtech Plc and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playtech Plc position performs unexpectedly, PennantPark Investment 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 PennantPark Investment will offset losses from the drop in PennantPark Investment's long position.| Playtech Plc vs. ANTA SPORTS PRODUCT | Playtech Plc vs. LG Display Co | Playtech Plc vs. USWE SPORTS AB | Playtech Plc vs. TRAVEL LEISURE DL 01 |
| PennantPark Investment vs. Blackstone Group | PennantPark Investment vs. BlackRock | PennantPark Investment vs. The Bank of | PennantPark Investment vs. Ameriprise Financial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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