Correlation Between Stagwell and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both Stagwell 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 Stagwell and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and PennantPark Investment, you can compare the effects of market volatilities on Stagwell 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 Stagwell with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and PennantPark Investment.
Diversification Opportunities for Stagwell and PennantPark Investment
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stagwell and PennantPark is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and Stagwell 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 Stagwell 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 Stagwell i.e., Stagwell and PennantPark Investment go up and down completely randomly.
Pair Corralation between Stagwell and PennantPark Investment
Given the investment horizon of 90 days Stagwell is expected to generate 1.59 times less return on investment than PennantPark Investment. In addition to that, Stagwell is 3.14 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 0.09 per unit of volatility. If you would invest 484.00 in PennantPark Investment on September 2, 2024 and sell it today you would earn a total of 193.00 from holding PennantPark Investment or generate 39.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. PennantPark Investment
Performance |
| Timeline |
| Stagwell |
| PennantPark Investment |
Stagwell and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and PennantPark Investment
The main advantage of trading using opposite Stagwell and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell 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.| Stagwell vs. ADTRAN Inc | Stagwell vs. Belden Inc | Stagwell vs. ADC Therapeutics SA | Stagwell vs. Comtech Telecommunications Corp |
| PennantPark Investment vs. Visa Class A | PennantPark Investment vs. Diamond Hill Investment | PennantPark Investment vs. Distoken Acquisition | PennantPark Investment 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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