Correlation Between PennantPark Investment and Hanover Insurance
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and Hanover Insurance 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 Hanover Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and The Hanover Insurance, you can compare the effects of market volatilities on PennantPark Investment and Hanover Insurance 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 Hanover Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and Hanover Insurance.
Diversification Opportunities for PennantPark Investment and Hanover Insurance
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and Hanover is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and The Hanover Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover Insurance 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 Hanover Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover Insurance has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Hanover Insurance go up and down completely randomly.
Pair Corralation between PennantPark Investment and Hanover Insurance
Given the investment horizon of 90 days PennantPark Investment is expected to generate 0.94 times more return on investment than Hanover Insurance. However, PennantPark Investment is 1.07 times less risky than Hanover Insurance. It trades about 0.07 of its potential returns per unit of risk. The Hanover Insurance is currently generating about 0.04 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PennantPark Investment vs. The Hanover Insurance
Performance |
| Timeline |
| PennantPark Investment |
| Hanover Insurance |
PennantPark Investment and Hanover Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and Hanover Insurance
The main advantage of trading using opposite PennantPark Investment and Hanover Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, Hanover Insurance 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 Hanover Insurance will offset losses from the drop in Hanover Insurance'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 |
| Hanover Insurance vs. Horace Mann Educators | Hanover Insurance vs. Kemper | Hanover Insurance vs. RLI Corp | Hanover Insurance vs. Global Indemnity PLC |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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