Correlation Between Main Street and Gores Holdings
Can any of the company-specific risk be diversified away by investing in both Main Street and Gores Holdings 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 Gores Holdings 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 Gores Holdings IX, you can compare the effects of market volatilities on Main Street and Gores Holdings 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 Gores Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Gores Holdings.
Diversification Opportunities for Main Street and Gores Holdings
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Main and Gores is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Gores Holdings IX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gores Holdings IX 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 Gores Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gores Holdings IX has no effect on the direction of Main Street i.e., Main Street and Gores Holdings go up and down completely randomly.
Pair Corralation between Main Street and Gores Holdings
Given the investment horizon of 90 days Main Street is expected to generate 113.12 times less return on investment than Gores Holdings. But when comparing it to its historical volatility, Main Street Capital is 127.97 times less risky than Gores Holdings. It trades about 0.12 of its potential returns per unit of risk. Gores Holdings IX is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Gores Holdings IX on August 29, 2024 and sell it today you would lose (29.84) from holding Gores Holdings IX or give up 99.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 67.34% |
| Values | Daily Returns |
Main Street Capital vs. Gores Holdings IX
Performance |
| Timeline |
| Main Street Capital |
| Gores Holdings IX |
Main Street and Gores Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Gores Holdings
The main advantage of trading using opposite Main Street and Gores Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Gores Holdings 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 Gores Holdings will offset losses from the drop in Gores Holdings' long position.| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect Capital |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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