Correlation Between PennantPark Investment and Carlyle
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Carlyle 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 Carlyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Carlyle Group, you can compare the effects of market volatilities on PennantPark Investment and Carlyle 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 Carlyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Carlyle.
Diversification Opportunities for PennantPark Investment and Carlyle
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Carlyle is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Carlyle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Group 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 Carlyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Group has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Carlyle go up and down completely randomly.
Pair Corralation between PennantPark Investment and Carlyle
Given the investment horizon of 90 days PennantPark Investment is expected to generate 2.33 times less return on investment than Carlyle. But when comparing it to its historical volatility, PennantPark Investment is 2.03 times less risky than Carlyle. It trades about 0.08 of its potential returns per unit of risk. Carlyle Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,409 in Carlyle Group on August 27, 2024 and sell it today you would earn a total of 1,956 from holding Carlyle Group or generate 57.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Carlyle Group
Performance |
| Timeline |
| PennantPark Investment |
| Carlyle Group |
PennantPark Investment and Carlyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Carlyle
The main advantage of trading using opposite PennantPark Investment and Carlyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Carlyle 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 Carlyle will offset losses from the drop in Carlyle's long position.| PennantPark Investment vs. PowerUp Acquisition Corp | PennantPark Investment vs. Aurora Innovation | PennantPark Investment vs. HUMANA INC | PennantPark Investment vs. Aquagold International |
| Carlyle vs. PowerUp Acquisition Corp | Carlyle vs. Aurora Innovation | Carlyle vs. HUMANA INC | Carlyle vs. Aquagold International |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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