Correlation Between PennantPark Investment and Black Hills
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Black Hills 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 Investment and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Black Hills, you can compare the effects of market volatilities on PennantPark Investment and Black Hills 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 Investment with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Black Hills.
Diversification Opportunities for PennantPark Investment and Black Hills
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and Black is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and PennantPark Investment 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 Investment are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Black Hills go up and down completely randomly.
Pair Corralation between PennantPark Investment and Black Hills
Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.92 times more return on investment than Black Hills. However, PennantPark Investment is 1.09 times less risky than Black Hills. It trades about 0.07 of its potential returns per unit of risk. Black Hills is currently generating about 0.01 per unit of risk. If you would invest 451.00 in PennantPark Investment on August 30, 2024 and sell it today you would earn a total of 224.00 from holding PennantPark Investment or generate 49.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Black Hills
Performance |
| Timeline |
| PennantPark Investment |
| Black Hills |
PennantPark Investment and Black Hills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Black Hills
The main advantage of trading using opposite PennantPark Investment and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.| PennantPark Investment vs. Sixth Street Specialty | PennantPark Investment vs. New Mountain Finance | PennantPark Investment vs. Carlyle Secured Lending | PennantPark Investment vs. BlackRock TCP Capital |
| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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