Correlation Between PennantPark Investment and TPG
Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and TPG 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 TPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and TPG Inc, you can compare the effects of market volatilities on PennantPark Investment and TPG 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 TPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and TPG.
Diversification Opportunities for PennantPark Investment and TPG
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PennantPark and TPG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc 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 TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and TPG go up and down completely randomly.
Pair Corralation between PennantPark Investment and TPG
Given the investment horizon of 90 days PennantPark Investment is expected to generate 7.5 times less return on investment than TPG. But when comparing it to its historical volatility, PennantPark Investment is 2.54 times less risky than TPG. It trades about 0.03 of its potential returns per unit of risk. TPG Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 6,659 in TPG Inc on August 24, 2024 and sell it today you would earn a total of 311.00 from holding TPG Inc or generate 4.67% 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. TPG Inc
Performance |
| Timeline |
| PennantPark Investment |
| TPG Inc |
PennantPark Investment and TPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PennantPark Investment and TPG
The main advantage of trading using opposite PennantPark Investment and TPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, TPG 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 TPG will offset losses from the drop in TPG'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 |
| TPG vs. Ares Management LP | TPG vs. Patria Investments | TPG vs. Apollo Global Management | TPG vs. Cion Investment 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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