Correlation Between Regional Management and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Regional Management and PennantPark Investment 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 Regional Management and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and PennantPark Investment, you can compare the effects of market volatilities on Regional Management and PennantPark Investment 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 Regional Management with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and PennantPark Investment.
Diversification Opportunities for Regional Management and PennantPark Investment
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Regional and PennantPark is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Regional Management 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 Regional Management Corp are associated (or correlated) with PennantPark Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Investment has no effect on the direction of Regional Management i.e., Regional Management and PennantPark Investment go up and down completely randomly.
Pair Corralation between Regional Management and PennantPark Investment
Allowing for the 90-day total investment horizon Regional Management is expected to generate 1.41 times less return on investment than PennantPark Investment. In addition to that, Regional Management is 2.08 times more volatile than PennantPark Investment. It trades about 0.02 of its total potential returns per unit of risk. PennantPark Investment is currently generating about 0.07 per unit of volatility. If you would invest 451.00 in PennantPark Investment on August 30, 2024 and sell it today you would earn a total of 224.00 from holding PennantPark Investment or generate 49.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. PennantPark Investment
Performance |
| Timeline |
| Regional Management Corp |
| PennantPark Investment |
Regional Management and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and PennantPark Investment
The main advantage of trading using opposite Regional Management and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, PennantPark Investment 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 Investment will offset losses from the drop in PennantPark Investment's long position.| Regional Management vs. Visa Class A | Regional Management vs. Mastercard | Regional Management vs. Discover Financial Services |
| PennantPark Investment vs. TPG Inc | PennantPark Investment vs. Carlyle Secured Lending | PennantPark Investment vs. Brookfield 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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