Correlation Between Main Street and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Main Street and Cornerstone Strategic 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 Main Street and Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Main Street Capital and Cornerstone Strategic Return, you can compare the effects of market volatilities on Main Street and Cornerstone Strategic 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 Main Street with a short position of Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Cornerstone Strategic.
Diversification Opportunities for Main Street and Cornerstone Strategic
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Main and Cornerstone is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Cornerstone Strategic Return in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic and Main Street 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 Main Street Capital are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Main Street i.e., Main Street and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Main Street and Cornerstone Strategic
Given the investment horizon of 90 days Main Street is expected to generate 1.59 times less return on investment than Cornerstone Strategic. But when comparing it to its historical volatility, Main Street Capital is 1.17 times less risky than Cornerstone Strategic. It trades about 0.3 of its potential returns per unit of risk. Cornerstone Strategic Return is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 833.00 in Cornerstone Strategic Return on August 29, 2024 and sell it today you would earn a total of 83.00 from holding Cornerstone Strategic Return or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Cornerstone Strategic Return
Performance |
| Timeline |
| Main Street Capital |
| Cornerstone Strategic |
Main Street and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Cornerstone Strategic
The main advantage of trading using opposite Main Street and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
| Cornerstone Strategic vs. Gabelli Global Small | Cornerstone Strategic vs. MFS Investment Grade | Cornerstone Strategic vs. Eaton Vance National | Cornerstone Strategic vs. GAMCO Natural Resources |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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