Correlation Between Stifel Financial and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Stifel Financial 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 Stifel Financial and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stifel Financial and PennantPark Investment, you can compare the effects of market volatilities on Stifel Financial 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 Stifel Financial with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stifel Financial and PennantPark Investment.
Diversification Opportunities for Stifel Financial and PennantPark Investment
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stifel and PennantPark is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Stifel Financial and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Stifel Financial 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 Stifel Financial 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 Stifel Financial i.e., Stifel Financial and PennantPark Investment go up and down completely randomly.
Pair Corralation between Stifel Financial and PennantPark Investment
Allowing for the 90-day total investment horizon Stifel Financial is expected to generate 2.4 times more return on investment than PennantPark Investment. However, Stifel Financial is 2.4 times more volatile than PennantPark Investment. It trades about 0.2 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.02 per unit of risk. If you would invest 10,051 in Stifel Financial on August 23, 2024 and sell it today you would earn a total of 1,450 from holding Stifel Financial or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stifel Financial vs. PennantPark Investment
Performance |
| Timeline |
| Stifel Financial |
| PennantPark Investment |
Stifel Financial and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stifel Financial and PennantPark Investment
The main advantage of trading using opposite Stifel Financial and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stifel Financial 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.| Stifel Financial vs. Evercore Partners | Stifel Financial vs. SCOR PK | Stifel Financial vs. Aquagold International | Stifel Financial vs. Small Cap Core |
| PennantPark Investment vs. DWS Municipal Income | PennantPark Investment vs. Blackrock Munivest | PennantPark Investment vs. SEI Investments | PennantPark Investment vs. SCOR PK |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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