Correlation Between US Global and Capital Southwest
Can any of the company-specific risk be diversified away by investing in both US Global and Capital Southwest 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 US Global and Capital Southwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Investors and Capital Southwest, you can compare the effects of market volatilities on US Global and Capital Southwest 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 US Global with a short position of Capital Southwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and Capital Southwest.
Diversification Opportunities for US Global and Capital Southwest
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GROW and Capital is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors and Capital Southwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Southwest and US Global 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 US Global Investors are associated (or correlated) with Capital Southwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Southwest has no effect on the direction of US Global i.e., US Global and Capital Southwest go up and down completely randomly.
Pair Corralation between US Global and Capital Southwest
Given the investment horizon of 90 days US Global Investors is expected to under-perform the Capital Southwest. In addition to that, US Global is 3.55 times more volatile than Capital Southwest. It trades about -0.02 of its total potential returns per unit of risk. Capital Southwest is currently generating about 0.07 per unit of volatility. If you would invest 2,299 in Capital Southwest on August 27, 2024 and sell it today you would earn a total of 277.00 from holding Capital Southwest or generate 12.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 80.22% |
| Values | Daily Returns |
US Global Investors vs. Capital Southwest
Performance |
| Timeline |
| US Global Investors |
| Capital Southwest |
US Global and Capital Southwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and Capital Southwest
The main advantage of trading using opposite US Global and Capital Southwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global position performs unexpectedly, Capital Southwest 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 Capital Southwest will offset losses from the drop in Capital Southwest's long position.| US Global vs. Gladstone Investment | US Global vs. PennantPark Floating Rate | US Global vs. Horizon Technology Finance | US Global vs. Stellus Capital Investment |
| Capital Southwest vs. Marine Products | Capital Southwest vs. Helmerich and Payne | Capital Southwest vs. Sonos Inc | Capital Southwest vs. National Beverage Corp |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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