Correlation Between PennantPark Investment and NiSource
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and NiSource 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 NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and NiSource, you can compare the effects of market volatilities on PennantPark Investment and NiSource 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 NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and NiSource.
Diversification Opportunities for PennantPark Investment and NiSource
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and NiSource is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and NiSource go up and down completely randomly.
Pair Corralation between PennantPark Investment and NiSource
Given the investment horizon of 90 days PennantPark Investment is expected to under-perform the NiSource. In addition to that, PennantPark Investment is 1.34 times more volatile than NiSource. It trades about -0.06 of its total potential returns per unit of risk. NiSource is currently generating about 0.51 per unit of volatility. If you would invest 3,416 in NiSource on August 30, 2024 and sell it today you would earn a total of 409.00 from holding NiSource or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PennantPark Investment vs. NiSource
Performance |
| Timeline |
| PennantPark Investment |
| NiSource |
PennantPark Investment and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and NiSource
The main advantage of trading using opposite PennantPark Investment and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's 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 |
| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource vs. Spire Inc |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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