Correlation Between Carlyle and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Carlyle 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 Carlyle and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carlyle Group and Prospect Capital, you can compare the effects of market volatilities on Carlyle 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 Carlyle with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlyle and Prospect Capital.
Diversification Opportunities for Carlyle and Prospect Capital
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Carlyle and Prospect is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Carlyle 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 Carlyle 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 Carlyle i.e., Carlyle and Prospect Capital go up and down completely randomly.
Pair Corralation between Carlyle and Prospect Capital
Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 0.72 times more return on investment than Prospect Capital. However, Carlyle Group is 1.38 times less risky than Prospect Capital. It trades about 0.12 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.1 per unit of risk. If you would invest 5,057 in Carlyle Group on August 27, 2024 and sell it today you would earn a total of 308.00 from holding Carlyle Group or generate 6.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carlyle Group vs. Prospect Capital
Performance |
| Timeline |
| Carlyle Group |
| Prospect Capital |
Carlyle and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carlyle and Prospect Capital
The main advantage of trading using opposite Carlyle and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlyle 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.| Carlyle vs. Apollo Global Management | Carlyle vs. Blackstone Group | Carlyle vs. Brookfield Asset Management | Carlyle vs. Ares Management LP |
| Prospect Capital vs. Gladstone Capital | Prospect Capital vs. Horizon Technology Finance | Prospect Capital vs. Gladstone Investment | Prospect Capital vs. Stellus Capital Investment |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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