Correlation Between Capital Southwest and XAI Octagon
Can any of the company-specific risk be diversified away by investing in both Capital Southwest and XAI Octagon 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 XAI Octagon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Southwest and XAI Octagon Floating, you can compare the effects of market volatilities on Capital Southwest and XAI Octagon 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 XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Southwest and XAI Octagon.
Diversification Opportunities for Capital Southwest and XAI Octagon
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Capital and XAI is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Capital Southwest and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Capital Southwest i.e., Capital Southwest and XAI Octagon go up and down completely randomly.
Pair Corralation between Capital Southwest and XAI Octagon
Given the investment horizon of 90 days Capital Southwest is expected to generate 1.29 times more return on investment than XAI Octagon. However, Capital Southwest is 1.29 times more volatile than XAI Octagon Floating. It trades about 0.08 of its potential returns per unit of risk. XAI Octagon Floating is currently generating about 0.07 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Southwest vs. XAI Octagon Floating
Performance |
| Timeline |
| Capital Southwest |
| XAI Octagon Floating |
Capital Southwest and XAI Octagon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Southwest and XAI Octagon
The main advantage of trading using opposite Capital Southwest and XAI Octagon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Southwest position performs unexpectedly, XAI Octagon 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 XAI Octagon will offset losses from the drop in XAI Octagon'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 |
| XAI Octagon vs. Oxford Lane Capital | XAI Octagon vs. Capital Southwest | XAI Octagon vs. Cornerstone Strategic Return | XAI Octagon 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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