Correlation Between Western Acquisition and PennantPark Floating

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

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

Diversification Opportunities for Western Acquisition and PennantPark Floating

0.45

Correlation Coefficient

Western Acquisition  PennantPark Floating

Very weak diversification

The 3 months correlation between Western and PennantPark is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Acquisition Ventures and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate and Western Acquisition 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 Western Acquisition Ventures are associated (or correlated) with PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Western Acquisition i.e., Western Acquisition and PennantPark Floating go up and down completely randomly.

Pair Corralation between Western Acquisition and PennantPark Floating

Given the investment horizon of 90 days Western Acquisition Ventures is expected to generate 1.2 times more return on investment than PennantPark Floating. However, Western Acquisition is 1.2 times more volatile than PennantPark Floating Rate. It trades about 0.03 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.03 per unit of risk. If you would invest  1,025  in Western Acquisition Ventures on October 11, 2024 and sell it today you would earn a total of  195.00  from holding Western Acquisition Ventures or generate 19.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Western Acquisition Ventures  vs.  PennantPark Floating Rate

Western Acquisition

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Western Acquisition may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Western Acquisition and PennantPark Floating

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

The idea behind Western Acquisition Ventures and PennantPark Floating Rate 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 Global Correlations module to find global opportunities by holding instruments from different markets.