Correlation Between Capital Southwest and Ellsworth Convertible
Can any of the company-specific risk be diversified away by investing in both Capital Southwest and Ellsworth Convertible 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 Ellsworth Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Southwest and Ellsworth Convertible Growth, you can compare the effects of market volatilities on Capital Southwest and Ellsworth Convertible 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 Ellsworth Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Southwest and Ellsworth Convertible.
Diversification Opportunities for Capital Southwest and Ellsworth Convertible
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capital and Ellsworth is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Capital Southwest and Ellsworth Convertible Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellsworth Convertible 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 Ellsworth Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellsworth Convertible has no effect on the direction of Capital Southwest i.e., Capital Southwest and Ellsworth Convertible go up and down completely randomly.
Pair Corralation between Capital Southwest and Ellsworth Convertible
Given the investment horizon of 90 days Capital Southwest is expected to generate 1.45 times more return on investment than Ellsworth Convertible. However, Capital Southwest is 1.45 times more volatile than Ellsworth Convertible Growth. It trades about 0.08 of its potential returns per unit of risk. Ellsworth Convertible Growth is currently generating about 0.09 per unit of risk. If you would invest 1,509 in Capital Southwest on November 3, 2024 and sell it today you would earn a total of 742.00 from holding Capital Southwest or generate 49.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Southwest vs. Ellsworth Convertible Growth
Performance |
| Timeline |
| Capital Southwest |
| Ellsworth Convertible |
Capital Southwest and Ellsworth Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Southwest and Ellsworth Convertible
The main advantage of trading using opposite Capital Southwest and Ellsworth Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Southwest position performs unexpectedly, Ellsworth Convertible 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 Ellsworth Convertible will offset losses from the drop in Ellsworth Convertible'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 |
| Ellsworth Convertible vs. Azimut Holding SpA | Ellsworth Convertible vs. Ameritrans Capital Corp | Ellsworth Convertible vs. Gdl Closed Fund | Ellsworth Convertible vs. Gabelli Global Small |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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