Correlation Between PennantPark Floating and Bowen Acquisition

Can any of the company-specific risk be diversified away by investing in both PennantPark Floating and Bowen Acquisition 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 Bowen Acquisition 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 Bowen Acquisition Corp, you can compare the effects of market volatilities on PennantPark Floating and Bowen Acquisition 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 Bowen Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of PennantPark Floating and Bowen Acquisition.

Diversification Opportunities for PennantPark Floating and Bowen Acquisition

-0.72

Correlation Coefficient

PennantPark Floating  Bowen Acquisition

Pay attention - limited upside

The 3 months correlation between PennantPark and Bowen is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding PennantPark Floating Rate and Bowen Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowen Acquisition Corp 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 Bowen Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowen Acquisition Corp has no effect on the direction of PennantPark Floating i.e., PennantPark Floating and Bowen Acquisition go up and down completely randomly.

Pair Corralation between PennantPark Floating and Bowen Acquisition

Given the investment horizon of 90 days PennantPark Floating Rate is expected to under-perform the Bowen Acquisition. In addition to that, PennantPark Floating is 4.76 times more volatile than Bowen Acquisition Corp. It trades about -0.05 of its total potential returns per unit of risk. Bowen Acquisition Corp is currently generating about 0.14 per unit of volatility. If you would invest  1,077  in Bowen Acquisition Corp on October 8, 2024 and sell it today you would earn a total of  17.00  from holding Bowen Acquisition Corp or generate 1.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PennantPark Floating Rate  vs.  Bowen Acquisition Corp

PennantPark Floating Rate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PennantPark Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Bowen Acquisition Corp

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bowen Acquisition Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Bowen Acquisition is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PennantPark Floating and Bowen Acquisition

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

The idea behind PennantPark Floating Rate and Bowen Acquisition Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.