Correlation Between Pearson PLC and PennantPark Floating
Can any of the company-specific risk be diversified away by investing in both Pearson PLC and PennantPark Floating 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 Pearson PLC and PennantPark Floating into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pearson PLC ADR and PennantPark Floating Rate, you can compare the effects of market volatilities on Pearson PLC and PennantPark Floating 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 Pearson PLC with a short position of PennantPark Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pearson PLC and PennantPark Floating.
Diversification Opportunities for Pearson PLC and PennantPark Floating
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pearson and PennantPark is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pearson PLC ADR and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Pearson PLC 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 Pearson PLC ADR are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Pearson PLC i.e., Pearson PLC and PennantPark Floating go up and down completely randomly.
Pair Corralation between Pearson PLC and PennantPark Floating
Considering the 90-day investment horizon Pearson PLC ADR is expected to generate 1.05 times more return on investment than PennantPark Floating. However, Pearson PLC is 1.05 times more volatile than PennantPark Floating Rate. It trades about 0.06 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.03 per unit of risk. If you would invest 1,073 in Pearson PLC ADR on September 4, 2024 and sell it today you would earn a total of 495.00 from holding Pearson PLC ADR or generate 46.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pearson PLC ADR vs. PennantPark Floating Rate
Performance |
| Timeline |
| Pearson PLC ADR |
| PennantPark Floating Rate |
Pearson PLC and PennantPark Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pearson PLC and PennantPark Floating
The main advantage of trading using opposite Pearson PLC and PennantPark Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pearson PLC position performs unexpectedly, PennantPark Floating 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 PennantPark Floating will offset losses from the drop in PennantPark Floating's long position.| Pearson PLC vs. John Wiley Sons | Pearson PLC vs. New York Times | Pearson PLC vs. Lee Enterprises Incorporated | Pearson PLC vs. Gannett Co |
| PennantPark Floating vs. Visa Class A | PennantPark Floating vs. Diamond Hill Investment | PennantPark Floating vs. Distoken Acquisition | PennantPark Floating vs. Associated Capital Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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