Correlation Between Binah Capital and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Binah Capital and Prospect Capital 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 Binah Capital and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binah Capital Group, and Prospect Capital, you can compare the effects of market volatilities on Binah Capital and Prospect Capital 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 Binah Capital with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binah Capital and Prospect Capital.
Diversification Opportunities for Binah Capital and Prospect Capital
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Binah and Prospect is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Binah Capital Group, and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Binah 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 Binah Capital Group, are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Binah Capital i.e., Binah Capital and Prospect Capital go up and down completely randomly.
Pair Corralation between Binah Capital and Prospect Capital
Assuming the 90 days horizon Binah Capital Group, is expected to generate 11.55 times more return on investment than Prospect Capital. However, Binah Capital is 11.55 times more volatile than Prospect Capital. It trades about 0.33 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.1 per unit of risk. If you would invest 2.21 in Binah Capital Group, on August 24, 2024 and sell it today you would earn a total of 4.23 from holding Binah Capital Group, or generate 191.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 81.82% |
| Values | Daily Returns |
Binah Capital Group, vs. Prospect Capital
Performance |
| Timeline |
| Binah Capital Group, |
| Prospect Capital |
Binah Capital and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binah Capital and Prospect Capital
The main advantage of trading using opposite Binah Capital and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binah Capital position performs unexpectedly, Prospect Capital 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.| Binah Capital vs. Everus Construction Group | Binah Capital vs. KeyCorp | Binah Capital vs. Discover Financial Services | Binah Capital vs. Tritent International Agriculture |
| Prospect Capital vs. PennyMac Mortgage Investment | Prospect Capital vs. SiriusPoint | Prospect Capital vs. Telephone and Data | Prospect Capital vs. ARMOUR Residential REIT |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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