Correlation Between Bain Capital and Capital Southwest
Can any of the company-specific risk be diversified away by investing in both Bain Capital and Capital Southwest 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 Bain Capital and Capital Southwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bain Capital Specialty and Capital Southwest, you can compare the effects of market volatilities on Bain Capital and Capital Southwest 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 Bain Capital with a short position of Capital Southwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bain Capital and Capital Southwest.
Diversification Opportunities for Bain Capital and Capital Southwest
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bain and Capital is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bain Capital Specialty and Capital Southwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Southwest and Bain 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 Bain Capital Specialty are associated (or correlated) with Capital Southwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Southwest has no effect on the direction of Bain Capital i.e., Bain Capital and Capital Southwest go up and down completely randomly.
Pair Corralation between Bain Capital and Capital Southwest
Given the investment horizon of 90 days Bain Capital Specialty is expected to generate 0.87 times more return on investment than Capital Southwest. However, Bain Capital Specialty is 1.14 times less risky than Capital Southwest. It trades about 0.1 of its potential returns per unit of risk. Capital Southwest is currently generating about 0.07 per unit of risk. If you would invest 1,069 in Bain Capital Specialty on October 20, 2024 and sell it today you would earn a total of 670.00 from holding Bain Capital Specialty or generate 62.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bain Capital Specialty vs. Capital Southwest
Performance |
| Timeline |
| Bain Capital Specialty |
| Capital Southwest |
Bain Capital and Capital Southwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bain Capital and Capital Southwest
The main advantage of trading using opposite Bain Capital and Capital Southwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bain Capital position performs unexpectedly, Capital Southwest 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 Capital Southwest will offset losses from the drop in Capital Southwest's long position.| Bain Capital vs. BlackRock TCP Capital | Bain Capital vs. Triplepoint Venture Growth | Bain Capital vs. Sixth Street Specialty | Bain Capital vs. Golub Capital BDC |
| Capital Southwest vs. Oxford Lane Capital | Capital Southwest vs. XAI Octagon Floating | Capital Southwest vs. Cornerstone Strategic Return | Capital Southwest vs. Cornerstone Strategic Value |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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