Correlation Between PennantPark Investment and EXELON

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Can any of the company-specific risk be diversified away by investing in both PennantPark Investment and EXELON 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 EXELON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PennantPark Investment and EXELON GENERATION LLC, you can compare the effects of market volatilities on PennantPark Investment and EXELON 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 EXELON. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Investment and EXELON.

Diversification Opportunities for PennantPark Investment and EXELON

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PennantPark and EXELON is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and EXELON GENERATION LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXELON GENERATION LLC 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 EXELON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXELON GENERATION LLC has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and EXELON go up and down completely randomly.

Pair Corralation between PennantPark Investment and EXELON

Given the investment horizon of 90 days PennantPark Investment is expected to generate 1.25 times more return on investment than EXELON. However, PennantPark Investment is 1.25 times more volatile than EXELON GENERATION LLC. It trades about 0.08 of its potential returns per unit of risk. EXELON GENERATION LLC is currently generating about 0.0 per unit of risk. If you would invest  447.00  in PennantPark Investment on August 27, 2024 and sell it today you would earn a total of  251.00  from holding PennantPark Investment or generate 56.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy93.55%
ValuesDaily Returns

PennantPark Investment  vs.  EXELON GENERATION LLC

 Performance 
       Timeline  
PennantPark Investment 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Investment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
EXELON GENERATION LLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EXELON GENERATION LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EXELON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

PennantPark Investment and EXELON Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PennantPark Investment and EXELON

The main advantage of trading using opposite PennantPark Investment and EXELON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Investment position performs unexpectedly, EXELON 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 EXELON will offset losses from the drop in EXELON's long position.
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The idea behind PennantPark Investment and EXELON GENERATION LLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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