Correlation Between Associated Capital and OFS Credit
Can any of the company-specific risk be diversified away by investing in both Associated Capital and OFS Credit 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 Associated Capital and OFS Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated Capital Group and OFS Credit, you can compare the effects of market volatilities on Associated Capital and OFS Credit 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 Associated Capital with a short position of OFS Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and OFS Credit.
Diversification Opportunities for Associated Capital and OFS Credit
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Associated and OFS is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group and OFS Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Credit and Associated Capital 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 Associated Capital Group are associated (or correlated) with OFS Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Credit has no effect on the direction of Associated Capital i.e., Associated Capital and OFS Credit go up and down completely randomly.
Pair Corralation between Associated Capital and OFS Credit
Allowing for the 90-day total investment horizon Associated Capital Group is expected to generate 3.65 times more return on investment than OFS Credit. However, Associated Capital is 3.65 times more volatile than OFS Credit. It trades about 0.05 of its potential returns per unit of risk. OFS Credit is currently generating about 0.15 per unit of risk. If you would invest 3,169 in Associated Capital Group on August 24, 2024 and sell it today you would earn a total of 481.00 from holding Associated Capital Group or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated Capital Group vs. OFS Credit
Performance |
| Timeline |
| Associated Capital |
| OFS Credit |
Associated Capital and OFS Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated Capital and OFS Credit
The main advantage of trading using opposite Associated Capital and OFS Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital position performs unexpectedly, OFS Credit 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 OFS Credit will offset losses from the drop in OFS Credit's long position.| Associated Capital vs. Abrdn Emerging Markets | Associated Capital vs. DWS Municipal Income | Associated Capital vs. Blackrock Muni Intermediate | Associated Capital vs. Blackrock Muniyield |
| OFS Credit vs. OFS Credit | OFS Credit vs. Oxford Lane Capital | OFS Credit vs. Gladstone Land Corp | OFS Credit vs. Eagle Point Income |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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