Correlation Between PennantPark Investment and Nabors Industries
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Nabors Industries 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 Nabors Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Nabors Industries, you can compare the effects of market volatilities on PennantPark Investment and Nabors Industries 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 Nabors Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Nabors Industries.
Diversification Opportunities for PennantPark Investment and Nabors Industries
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PennantPark and Nabors is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Nabors Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nabors Industries 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 Nabors Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nabors Industries has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Nabors Industries go up and down completely randomly.
Pair Corralation between PennantPark Investment and Nabors Industries
Given the investment horizon of 90 days PennantPark Investment is expected to under-perform the Nabors Industries. But the stock apears to be less risky and, when comparing its historical volatility, PennantPark Investment is 3.29 times less risky than Nabors Industries. The stock trades about -0.02 of its potential returns per unit of risk. The Nabors Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,910 in Nabors Industries on August 31, 2024 and sell it today you would earn a total of 433.00 from holding Nabors Industries or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Nabors Industries
Performance |
| Timeline |
| PennantPark Investment |
| Nabors Industries |
PennantPark Investment and Nabors Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Nabors Industries
The main advantage of trading using opposite PennantPark Investment and Nabors Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Nabors Industries 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 Nabors Industries will offset losses from the drop in Nabors Industries' long position.| PennantPark Investment vs. Ares Capital | PennantPark Investment vs. Hercules Capital | PennantPark Investment vs. Main Street Capital |
| Nabors Industries vs. Helmerich and Payne | Nabors Industries vs. Precision Drilling | Nabors Industries vs. Seadrill Limited | Nabors Industries vs. Borr Drilling |
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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