Correlation Between Oaktree Capital and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both Oaktree 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 Oaktree 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 Oaktree Capital Group and Prospect Capital, you can compare the effects of market volatilities on Oaktree 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 Oaktree Capital with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oaktree Capital and Prospect Capital.
Diversification Opportunities for Oaktree Capital and Prospect Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oaktree and Prospect is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Capital Group and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Oaktree 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 Oaktree Capital Group 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 Oaktree Capital i.e., Oaktree Capital and Prospect Capital go up and down completely randomly.
Pair Corralation between Oaktree Capital and Prospect Capital
Assuming the 90 days trading horizon Oaktree Capital Group is expected to generate 0.57 times more return on investment than Prospect Capital. However, Oaktree Capital Group is 1.76 times less risky than Prospect Capital. It trades about -0.06 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.09 per unit of risk. If you would invest 2,396 in Oaktree Capital Group on August 27, 2024 and sell it today you would lose (40.00) from holding Oaktree Capital Group or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oaktree Capital Group vs. Prospect Capital
Performance |
| Timeline |
| Oaktree Capital Group |
| Prospect Capital |
Oaktree Capital and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oaktree Capital and Prospect Capital
The main advantage of trading using opposite Oaktree Capital and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oaktree 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.| Oaktree Capital vs. The Gabelli Multimedia | Oaktree Capital vs. The Gabelli Equity | Oaktree Capital vs. Virtus AllianzGI Convertible | Oaktree Capital vs. Tri Continental PFD |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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