Correlation Between Great Elm and OFS Capital
Can any of the company-specific risk be diversified away by investing in both Great Elm and OFS 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 Great Elm and OFS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Capital and OFS Capital Corp, you can compare the effects of market volatilities on Great Elm and OFS 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 Great Elm with a short position of OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and OFS Capital.
Diversification Opportunities for Great Elm and OFS Capital
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and OFS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital Corp and Great Elm 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 Great Elm Capital are associated (or correlated) with OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of Great Elm i.e., Great Elm and OFS Capital go up and down completely randomly.
Pair Corralation between Great Elm and OFS Capital
Given the investment horizon of 90 days Great Elm Capital is expected to generate 3.37 times more return on investment than OFS Capital. However, Great Elm is 3.37 times more volatile than OFS Capital Corp. It trades about 0.0 of its potential returns per unit of risk. OFS Capital Corp is currently generating about -0.12 per unit of risk. If you would invest 1,067 in Great Elm Capital on November 4, 2024 and sell it today you would lose (2.00) from holding Great Elm Capital or give up 0.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Elm Capital vs. OFS Capital Corp
Performance |
| Timeline |
| Great Elm Capital |
| OFS Capital Corp |
Great Elm and OFS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and OFS Capital
The main advantage of trading using opposite Great Elm and OFS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, OFS 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 OFS Capital will offset losses from the drop in OFS Capital's long position.| Great Elm vs. John Hancock Investors | Great Elm vs. MFS Charter Income | Great Elm vs. GCM Grosvenor | Great Elm vs. BlackRock ESG Capital |
| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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