Correlation Between PennantPark Investment and Iris Energy
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Iris Energy 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 Iris Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Iris Energy, you can compare the effects of market volatilities on PennantPark Investment and Iris Energy 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 Iris Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Iris Energy.
Diversification Opportunities for PennantPark Investment and Iris Energy
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Iris is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Iris Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iris Energy 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 Iris Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iris Energy has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Iris Energy go up and down completely randomly.
Pair Corralation between PennantPark Investment and Iris Energy
Given the investment horizon of 90 days PennantPark Investment is expected to generate 19.46 times less return on investment than Iris Energy. But when comparing it to its historical volatility, PennantPark Investment is 6.69 times less risky than Iris Energy. It trades about 0.04 of its potential returns per unit of risk. Iris Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 925.00 in Iris Energy on August 26, 2024 and sell it today you would earn a total of 153.00 from holding Iris Energy or generate 16.54% 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. Iris Energy
Performance |
| Timeline |
| PennantPark Investment |
| Iris Energy |
PennantPark Investment and Iris Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Iris Energy
The main advantage of trading using opposite PennantPark Investment and Iris Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Iris Energy 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 Iris Energy will offset losses from the drop in Iris Energy's long position.| PennantPark Investment vs. PowerUp Acquisition Corp | PennantPark Investment vs. Aurora Innovation | PennantPark Investment vs. HUMANA INC | PennantPark Investment vs. Aquagold International |
| Iris Energy vs. Corporacion America Airports | Iris Energy vs. Mayfair Gold Corp | Iris Energy vs. AerCap Holdings NV | Iris Energy vs. United Rentals |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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