Correlation Between Orix Corp and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Orix Corp and Prospect 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 Orix Corp and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orix Corp Ads and Prospect Capital, you can compare the effects of market volatilities on Orix Corp and Prospect 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 Orix Corp with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orix Corp and Prospect Capital.
Diversification Opportunities for Orix Corp and Prospect Capital
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orix and Prospect is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Orix Corp 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 Orix Corp Ads are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Orix Corp i.e., Orix Corp and Prospect Capital go up and down completely randomly.
Pair Corralation between Orix Corp and Prospect Capital
Allowing for the 90-day total investment horizon Orix Corp Ads is expected to generate 0.56 times more return on investment than Prospect Capital. However, Orix Corp Ads is 1.77 times less risky than Prospect Capital. It trades about 0.08 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.1 per unit of risk. If you would invest 10,537 in Orix Corp Ads on August 24, 2024 and sell it today you would earn a total of 245.00 from holding Orix Corp Ads or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orix Corp Ads vs. Prospect Capital
Performance |
| Timeline |
| Orix Corp Ads |
| Prospect Capital |
Orix Corp and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orix Corp and Prospect Capital
The main advantage of trading using opposite Orix Corp and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix Corp position performs unexpectedly, Prospect 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.| Orix Corp vs. Small Cap Core | Orix Corp vs. Morningstar Unconstrained Allocation | Orix Corp vs. Mutual Of America | Orix Corp vs. Ep Emerging Markets |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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