Correlation Between Pennant and Sharps Technology
Can any of the company-specific risk be diversified away by investing in both Pennant and Sharps Technology 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 Pennant and Sharps Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pennant Group and Sharps Technology, you can compare the effects of market volatilities on Pennant and Sharps Technology 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 Pennant with a short position of Sharps Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pennant and Sharps Technology.
Diversification Opportunities for Pennant and Sharps Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pennant and Sharps is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pennant Group and Sharps Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharps Technology and Pennant 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 Pennant Group are associated (or correlated) with Sharps Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharps Technology has no effect on the direction of Pennant i.e., Pennant and Sharps Technology go up and down completely randomly.
Pair Corralation between Pennant and Sharps Technology
Given the investment horizon of 90 days Pennant Group is expected to generate 0.19 times more return on investment than Sharps Technology. However, Pennant Group is 5.28 times less risky than Sharps Technology. It trades about 0.05 of its potential returns per unit of risk. Sharps Technology is currently generating about -0.05 per unit of risk. If you would invest 1,854 in Pennant Group on December 2, 2024 and sell it today you would earn a total of 423.00 from holding Pennant Group or generate 22.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pennant Group vs. Sharps Technology
Performance |
| Timeline |
| Pennant Group |
| Sharps Technology |
Pennant and Sharps Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pennant and Sharps Technology
The main advantage of trading using opposite Pennant and Sharps Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pennant position performs unexpectedly, Sharps Technology 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 Sharps Technology will offset losses from the drop in Sharps Technology's long position.| Pennant vs. Encompass Health Corp | ||
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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