Correlation Between Alphabet and OFS Capital
Can any of the company-specific risk be diversified away by investing in both Alphabet 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 Alphabet and OFS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and OFS Capital Corp, you can compare the effects of market volatilities on Alphabet 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 Alphabet with a short position of OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and OFS Capital.
Diversification Opportunities for Alphabet and OFS Capital
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alphabet and OFS is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C 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 Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and OFS Capital go up and down completely randomly.
Pair Corralation between Alphabet and OFS Capital
Given the investment horizon of 90 days Alphabet Inc Class C is expected to under-perform the OFS Capital. In addition to that, Alphabet is 3.21 times more volatile than OFS Capital Corp. It trades about -0.07 of its total potential returns per unit of risk. OFS Capital Corp is currently generating about -0.06 per unit of volatility. If you would invest 815.00 in OFS Capital Corp on August 31, 2024 and sell it today you would lose (7.00) from holding OFS Capital Corp or give up 0.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alphabet Inc Class C vs. OFS Capital Corp
Performance |
| Timeline |
| Alphabet Class C |
| OFS Capital Corp |
Alphabet and OFS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and OFS Capital
The main advantage of trading using opposite Alphabet and OFS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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.The idea behind Alphabet Inc Class C and OFS Capital Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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