Correlation Between PennantPark Investment and Royalty Management
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Royalty Management 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 Royalty Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Royalty Management Holding, you can compare the effects of market volatilities on PennantPark Investment and Royalty Management 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 Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Royalty Management.
Diversification Opportunities for PennantPark Investment and Royalty Management
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and Royalty is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management 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 Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Royalty Management go up and down completely randomly.
Pair Corralation between PennantPark Investment and Royalty Management
Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.21 times more return on investment than Royalty Management. However, PennantPark Investment is 4.77 times less risky than Royalty Management. It trades about 0.07 of its potential returns per unit of risk. Royalty Management Holding is currently generating about -0.05 per unit of risk. If you would invest 449.00 in PennantPark Investment on September 3, 2024 and sell it today you would earn a total of 228.00 from holding PennantPark Investment or generate 50.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. Royalty Management Holding
Performance |
| Timeline |
| PennantPark Investment |
| Royalty Management |
PennantPark Investment and Royalty Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Royalty Management
The main advantage of trading using opposite PennantPark Investment and Royalty Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Royalty Management 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 Royalty Management will offset losses from the drop in Royalty Management'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 |
| Royalty Management vs. CapitaLand Investment Limited | Royalty Management vs. PennantPark Investment | Royalty Management vs. Radcom | Royalty Management vs. Weibo Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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