Correlation Between Main Street and Sixth Street
Can any of the company-specific risk be diversified away by investing in both Main Street and Sixth Street 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 Sixth Street 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 Sixth Street Specialty, you can compare the effects of market volatilities on Main Street and Sixth Street 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 Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Main Street and Sixth Street.
Diversification Opportunities for Main Street and Sixth Street
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Main and Sixth is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Main Street Capital and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty 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 Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Main Street i.e., Main Street and Sixth Street go up and down completely randomly.
Pair Corralation between Main Street and Sixth Street
Given the investment horizon of 90 days Main Street Capital is expected to generate 0.9 times more return on investment than Sixth Street. However, Main Street Capital is 1.11 times less risky than Sixth Street. It trades about 0.19 of its potential returns per unit of risk. Sixth Street Specialty is currently generating about 0.0 per unit of risk. If you would invest 5,141 in Main Street Capital on August 24, 2024 and sell it today you would earn a total of 177.00 from holding Main Street Capital or generate 3.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Main Street Capital vs. Sixth Street Specialty
Performance |
| Timeline |
| Main Street Capital |
| Sixth Street Specialty |
Main Street and Sixth Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Main Street and Sixth Street
The main advantage of trading using opposite Main Street and Sixth Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Main Street position performs unexpectedly, Sixth Street 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 Sixth Street will offset losses from the drop in Sixth Street'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 |
| Sixth Street vs. New Mountain Finance | Sixth Street vs. Carlyle Secured Lending | Sixth Street vs. BlackRock TCP Capital | Sixth Street vs. Fidus Investment Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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