Correlation Between PennantPark Investment and Stagwell
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Stagwell 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 Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and Stagwell, you can compare the effects of market volatilities on PennantPark Investment and Stagwell 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 Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Stagwell.
Diversification Opportunities for PennantPark Investment and Stagwell
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between PennantPark and Stagwell is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell 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 Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Stagwell go up and down completely randomly.
Pair Corralation between PennantPark Investment and Stagwell
Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.32 times more return on investment than Stagwell. However, PennantPark Investment is 3.14 times less risky than Stagwell. It trades about 0.09 of its potential returns per unit of risk. Stagwell is currently generating about 0.02 per unit of risk. If you would invest 484.00 in PennantPark Investment on September 2, 2024 and sell it today you would earn a total of 193.00 from holding PennantPark Investment or generate 39.88% 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. Stagwell
Performance |
| Timeline |
| PennantPark Investment |
| Stagwell |
PennantPark Investment and Stagwell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Stagwell
The main advantage of trading using opposite PennantPark Investment and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.| PennantPark Investment vs. Visa Class A | PennantPark Investment vs. Diamond Hill Investment | PennantPark Investment vs. Distoken Acquisition | PennantPark Investment vs. Associated Capital Group |
| Stagwell vs. ADTRAN Inc | Stagwell vs. Belden Inc | Stagwell vs. ADC Therapeutics SA | Stagwell vs. Comtech Telecommunications 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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