Correlation Between PennantPark Floating and MTS Systems

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and MTS Systems 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 PennantPark Floating and MTS Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PennantPark Floating Rate and MTS Systems, you can compare the effects of market volatilities on PennantPark Floating and MTS Systems 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 PennantPark Floating with a short position of MTS Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and MTS Systems.

Diversification Opportunities for PennantPark Floating and MTS Systems

0.0

Correlation Coefficient

PennantPark Floating  MTS Systems

Pay attention - limited upside

The 3 months correlation between PennantPark and MTS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and MTS Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTS Systems and PennantPark Floating 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 PennantPark Floating Rate are associated (or correlated) with MTS Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTS Systems has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and MTS Systems go up and down completely randomly.

Pair Corralation between PennantPark Floating and MTS Systems

If you would invest  1,014  in PennantPark Floating Rate on February 2, 2024 and sell it today you would earn a total of  116.00  from holding PennantPark Floating Rate or generate 11.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PennantPark Floating Rate  vs.  MTS Systems

PennantPark Floating Rate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, PennantPark Floating is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

MTS Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTS Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MTS Systems is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PennantPark Floating and MTS Systems

The main advantage of trading using opposite PennantPark Floating and MTS Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PennantPark Floating position performs unexpectedly, MTS Systems 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 MTS Systems will offset losses from the drop in MTS Systems' long position.

The idea behind PennantPark Floating Rate and MTS Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.