Correlation Between PennantPark Investment and BTB Real
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and BTB Real 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 BTB Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and BTB Real Estate, you can compare the effects of market volatilities on PennantPark Investment and BTB Real 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 BTB Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and BTB Real.
Diversification Opportunities for PennantPark Investment and BTB Real
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PennantPark and BTB is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and BTB Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTB Real Estate 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 BTB Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTB Real Estate has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and BTB Real go up and down completely randomly.
Pair Corralation between PennantPark Investment and BTB Real
Given the investment horizon of 90 days PennantPark Investment is expected to under-perform the BTB Real. In addition to that, PennantPark Investment is 2.0 times more volatile than BTB Real Estate. It trades about -0.03 of its total potential returns per unit of risk. BTB Real Estate is currently generating about -0.05 per unit of volatility. If you would invest 260.00 in BTB Real Estate on September 1, 2024 and sell it today you would lose (2.00) from holding BTB Real Estate or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. BTB Real Estate
Performance |
| Timeline |
| PennantPark Investment |
| BTB Real Estate |
PennantPark Investment and BTB Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and BTB Real
The main advantage of trading using opposite PennantPark Investment and BTB Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, BTB Real 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 BTB Real will offset losses from the drop in BTB Real's long position.| PennantPark Investment vs. Visa Class A | PennantPark Investment vs. Diamond Hill Investment | PennantPark Investment vs. Distoken Acquisition | PennantPark Investment vs. Associated Capital Group |
| BTB Real vs. Boston Properties | BTB Real vs. Kilroy Realty Corp | BTB Real vs. SL Green Realty | BTB Real vs. Vornado Realty Trust |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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