Correlation Between PennantPark Investment and Stellus Capital
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Stellus Capital 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 Stellus Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Stellus Capital Investment, you can compare the effects of market volatilities on PennantPark Investment and Stellus Capital 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 Stellus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Stellus Capital.
Diversification Opportunities for PennantPark Investment and Stellus Capital
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PennantPark and Stellus is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Stellus Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellus Capital Inve 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 Stellus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellus Capital Inve has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Stellus Capital go up and down completely randomly.
Pair Corralation between PennantPark Investment and Stellus Capital
Given the investment horizon of 90 days PennantPark Investment is expected to under-perform the Stellus Capital. In addition to that, PennantPark Investment is 1.75 times more volatile than Stellus Capital Investment. It trades about -0.04 of its total potential returns per unit of risk. Stellus Capital Investment is currently generating about 0.14 per unit of volatility. If you would invest 1,363 in Stellus Capital Investment on September 12, 2024 and sell it today you would earn a total of 21.50 from holding Stellus Capital Investment or generate 1.58% 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. Stellus Capital Investment
Performance |
| Timeline |
| PennantPark Investment |
| Stellus Capital Inve |
PennantPark Investment and Stellus Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Stellus Capital
The main advantage of trading using opposite PennantPark Investment and Stellus Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Stellus Capital 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 Stellus Capital will offset losses from the drop in Stellus Capital's long position.| PennantPark Investment vs. Stellus Capital Investment | PennantPark Investment vs. Prospect Capital | PennantPark Investment vs. Gladstone Capital | PennantPark Investment vs. Main Street Capital |
| Stellus Capital vs. PennantPark Floating Rate | Stellus Capital vs. Gladstone Capital | Stellus Capital vs. Gladstone Investment | Stellus Capital vs. Prospect Capital |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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