Correlation Between CARSALESCOM and PennantPark Investment
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and PennantPark Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and PennantPark Investment, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of PennantPark Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and PennantPark Investment.
Diversification Opportunities for CARSALESCOM and PennantPark Investment
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CARSALESCOM and PennantPark is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM and PennantPark Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Investment and CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and PennantPark Investment go up and down completely randomly.
Pair Corralation between CARSALESCOM and PennantPark Investment
Assuming the 90 days trading horizon CARSALESCOM is expected to generate 0.79 times more return on investment than PennantPark Investment. However, CARSALESCOM is 1.27 times less risky than PennantPark Investment. It trades about 0.26 of its potential returns per unit of risk. PennantPark Investment is currently generating about 0.07 per unit of risk. If you would invest 2,180 in CARSALESCOM on October 25, 2024 and sell it today you would earn a total of 180.00 from holding CARSALESCOM or generate 8.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
CARSALESCOM vs. PennantPark Investment
Performance |
| Timeline |
| CARSALESCOM |
| PennantPark Investment |
CARSALESCOM and PennantPark Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and PennantPark Investment
The main advantage of trading using opposite CARSALESCOM and PennantPark Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. SHIP HEALTHCARE HLDGINC | CARSALESCOM vs. CVS Health | CARSALESCOM vs. Citic Telecom International | CARSALESCOM vs. COMBA TELECOM SYST |
| PennantPark Investment vs. Heidelberg Materials AG | PennantPark Investment vs. PICKN PAY STORES | PennantPark Investment vs. Rayonier Advanced Materials | PennantPark Investment vs. COSTCO WHOLESALE CDR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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