Correlation Between Main Street and Logan Ridge
Can any of the company-specific risk be diversified away by investing in both Main Street and Logan Ridge 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 Logan Ridge 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 Logan Ridge Finance, you can compare the effects of market volatilities on Main Street and Logan Ridge 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 Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Logan Ridge.
Diversification Opportunities for Main Street and Logan Ridge
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Main and Logan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance 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 Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Main Street i.e., Main Street and Logan Ridge go up and down completely randomly.
Pair Corralation between Main Street and Logan Ridge
Given the investment horizon of 90 days Main Street Capital is expected to generate 0.86 times more return on investment than Logan Ridge. However, Main Street Capital is 1.17 times less risky than Logan Ridge. It trades about 0.38 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about -0.24 per unit of risk. If you would invest 5,616 in Main Street Capital on October 21, 2024 and sell it today you would earn a total of 388.00 from holding Main Street Capital or generate 6.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Logan Ridge Finance
Performance |
| Timeline |
| Main Street Capital |
| Logan Ridge Finance |
Main Street and Logan Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Logan Ridge
The main advantage of trading using opposite Main Street and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Logan Ridge 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 Logan Ridge will offset losses from the drop in Logan Ridge'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 |
| Logan Ridge vs. Badger Infrastructure Solutions | Logan Ridge vs. Portman Ridge Finance | Logan Ridge vs. Inotiv Inc | Logan Ridge vs. Phenixfin |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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