Correlation Between Capital Southwest and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Capital Southwest and Cornerstone Strategic 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 Capital Southwest and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Southwest and Cornerstone Strategic Return, you can compare the effects of market volatilities on Capital Southwest and Cornerstone Strategic 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 Capital Southwest with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Southwest and Cornerstone Strategic.
Diversification Opportunities for Capital Southwest and Cornerstone Strategic
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Cornerstone is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Capital Southwest and Cornerstone Strategic Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Capital Southwest 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 Capital Southwest are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Capital Southwest i.e., Capital Southwest and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Capital Southwest and Cornerstone Strategic
Given the investment horizon of 90 days Capital Southwest is expected to generate 1.02 times more return on investment than Cornerstone Strategic. However, Capital Southwest is 1.02 times more volatile than Cornerstone Strategic Return. It trades about 0.08 of its potential returns per unit of risk. Cornerstone Strategic Return is currently generating about 0.08 per unit of risk. If you would invest 1,441 in Capital Southwest on August 24, 2024 and sell it today you would earn a total of 888.00 from holding Capital Southwest or generate 61.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Southwest vs. Cornerstone Strategic Return
Performance |
| Timeline |
| Capital Southwest |
| Cornerstone Strategic |
Capital Southwest and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Southwest and Cornerstone Strategic
The main advantage of trading using opposite Capital Southwest and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Southwest position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| Capital Southwest vs. Oxford Lane Capital | Capital Southwest vs. XAI Octagon Floating | Capital Southwest vs. Cornerstone Strategic Return | Capital Southwest vs. Cornerstone Strategic Value |
| Cornerstone Strategic vs. MFS Investment Grade | Cornerstone Strategic vs. Eaton Vance National | Cornerstone Strategic vs. Blackrock Muniyield Quality | Cornerstone Strategic vs. Munivest Fund |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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