Correlation Between Great Elm and Saratoga Investment
Can any of the company-specific risk be diversified away by investing in both Great Elm and Saratoga Investment 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 Saratoga Investment 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 Saratoga Investment Corp, you can compare the effects of market volatilities on Great Elm and Saratoga Investment 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 Saratoga Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Saratoga Investment.
Diversification Opportunities for Great Elm and Saratoga Investment
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Saratoga is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Capital and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of Great Elm i.e., Great Elm and Saratoga Investment go up and down completely randomly.
Pair Corralation between Great Elm and Saratoga Investment
Assuming the 90 days horizon Great Elm Capital is expected to generate 0.2 times more return on investment than Saratoga Investment. However, Great Elm Capital is 4.98 times less risky than Saratoga Investment. It trades about 0.27 of its potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.04 per unit of risk. If you would invest 2,478 in Great Elm Capital on September 13, 2024 and sell it today you would earn a total of 11.00 from holding Great Elm Capital or generate 0.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Great Elm Capital vs. Saratoga Investment Corp
Performance |
| Timeline |
| Great Elm Capital |
| Saratoga Investment Corp |
Great Elm and Saratoga Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Saratoga Investment
The main advantage of trading using opposite Great Elm and Saratoga Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm position performs unexpectedly, Saratoga Investment 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 Saratoga Investment will offset losses from the drop in Saratoga Investment's long position.| Great Elm vs. Gladstone Investment | Great Elm vs. HUMANA INC | Great Elm vs. Aquagold International | Great Elm vs. Barloworld Ltd ADR |
| Saratoga Investment vs. ATS Corporation | Saratoga Investment vs. Deswell Industries | Saratoga Investment vs. Chunghwa Telecom Co | Saratoga Investment vs. Highway Holdings Limited |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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