Correlation Between Monroe Capital and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Monroe Capital and Prospect 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 Monroe Capital and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monroe Capital Corp and Prospect Capital, you can compare the effects of market volatilities on Monroe Capital and Prospect 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 Monroe Capital with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monroe Capital and Prospect Capital.
Diversification Opportunities for Monroe Capital and Prospect Capital
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Monroe and Prospect is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Monroe Capital 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 Monroe Capital Corp are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Monroe Capital i.e., Monroe Capital and Prospect Capital go up and down completely randomly.
Pair Corralation between Monroe Capital and Prospect Capital
Given the investment horizon of 90 days Monroe Capital Corp is expected to generate 0.79 times more return on investment than Prospect Capital. However, Monroe Capital Corp is 1.26 times less risky than Prospect Capital. It trades about 0.11 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.05 per unit of risk. If you would invest 702.00 in Monroe Capital Corp on August 24, 2024 and sell it today you would earn a total of 142.00 from holding Monroe Capital Corp or generate 20.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monroe Capital Corp vs. Prospect Capital
Performance |
| Timeline |
| Monroe Capital Corp |
| Prospect Capital |
Monroe Capital and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monroe Capital and Prospect Capital
The main advantage of trading using opposite Monroe Capital and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monroe Capital position performs unexpectedly, Prospect 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.| Monroe Capital vs. WhiteHorse Finance | Monroe Capital vs. OFS Capital Corp | Monroe Capital vs. Fidus Investment Corp | Monroe Capital vs. BlackRock TCP Capital |
| Prospect Capital vs. Gladstone Capital | Prospect Capital vs. Horizon Technology Finance | Prospect Capital vs. Gladstone Investment | Prospect Capital vs. Stellus Capital Investment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |