Correlation Between PennantPark Investment and Cardano

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

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

Diversification Opportunities for PennantPark Investment and Cardano

-0.55

Correlation Coefficient

PennantPark Investment  Cardano

Excellent diversification

The 3 months correlation between PennantPark and Cardano is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Investment and Cardano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardano and PennantPark Investment 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 Investment are associated (or correlated) with Cardano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardano has no effect on the direction of PennantPark Investment i.e., PennantPark Investment and Cardano go up and down completely randomly.

Pair Corralation between PennantPark Investment and Cardano

Given the investment horizon of 90 days PennantPark Investment is expected to generate 3.32 times less return on investment than Cardano. But when comparing it to its historical volatility, PennantPark Investment is 5.42 times less risky than Cardano. It trades about 0.17 of its potential returns per unit of risk. Cardano is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Cardano on January 20, 2024 and sell it today you would earn a total of  18.00  from holding Cardano or generate 64.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

PennantPark Investment  vs.  Cardano

PennantPark Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennantPark Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PennantPark Investment is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Cardano

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PennantPark Investment and Cardano

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

The idea behind PennantPark Investment and Cardano 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.