Correlation Between Main Street and Golub Capital
Can any of the company-specific risk be diversified away by investing in both Main Street and Golub 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 Main Street and Golub Capital 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 Golub Capital BDC, you can compare the effects of market volatilities on Main Street and Golub 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 Main Street with a short position of Golub Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Golub Capital.
Diversification Opportunities for Main Street and Golub Capital
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Main and Golub is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Golub Capital BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golub Capital BDC 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 Golub Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golub Capital BDC has no effect on the direction of Main Street i.e., Main Street and Golub Capital go up and down completely randomly.
Pair Corralation between Main Street and Golub Capital
Given the investment horizon of 90 days Main Street Capital is expected to generate 1.0 times more return on investment than Golub Capital. However, Main Street is 1.0 times more volatile than Golub Capital BDC. It trades about 0.12 of its potential returns per unit of risk. Golub Capital BDC is currently generating about 0.08 per unit of risk. If you would invest 3,094 in Main Street Capital on August 27, 2024 and sell it today you would earn a total of 2,303 from holding Main Street Capital or generate 74.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Golub Capital BDC
Performance |
| Timeline |
| Main Street Capital |
| Golub Capital BDC |
Main Street and Golub Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Golub Capital
The main advantage of trading using opposite Main Street and Golub Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Golub 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 Golub Capital will offset losses from the drop in Golub Capital'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 |
| Golub Capital vs. BlackRock TCP Capital | Golub Capital vs. Carlyle Secured Lending | Golub Capital vs. Triplepoint Venture Growth | Golub 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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