Correlation Between OFS Capital and Great Elm
Can any of the company-specific risk be diversified away by investing in both OFS Capital and Great Elm 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 OFS Capital and Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OFS Capital Corp and Great Elm Capital, you can compare the effects of market volatilities on OFS Capital and Great Elm 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 OFS Capital with a short position of Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Capital and Great Elm.
Diversification Opportunities for OFS Capital and Great Elm
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between OFS and Great is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding OFS Capital Corp and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm Capital and OFS 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 OFS Capital Corp are associated (or correlated) with Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of OFS Capital i.e., OFS Capital and Great Elm go up and down completely randomly.
Pair Corralation between OFS Capital and Great Elm
Considering the 90-day investment horizon OFS Capital is expected to generate 7.78 times less return on investment than Great Elm. But when comparing it to its historical volatility, OFS Capital Corp is 2.16 times less risky than Great Elm. It trades about 0.05 of its potential returns per unit of risk. Great Elm Capital is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,022 in Great Elm Capital on October 25, 2024 and sell it today you would earn a total of 63.00 from holding Great Elm Capital or generate 6.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Capital Corp vs. Great Elm Capital
Performance |
| Timeline |
| OFS Capital Corp |
| Great Elm Capital |
OFS Capital and Great Elm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Capital and Great Elm
The main advantage of trading using opposite OFS Capital and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Capital position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
| Great Elm vs. John Hancock Investors | Great Elm vs. MFS Charter Income | Great Elm vs. GCM Grosvenor | Great Elm vs. BlackRock ESG 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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