Correlation Between OFS Capital and Horizon Technology
Can any of the company-specific risk be diversified away by investing in both OFS Capital and Horizon Technology 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 Horizon Technology 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 Horizon Technology Finance, you can compare the effects of market volatilities on OFS Capital and Horizon Technology 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 Horizon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Capital and Horizon Technology.
Diversification Opportunities for OFS Capital and Horizon Technology
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between OFS and Horizon is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding OFS Capital Corp and Horizon Technology Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Technology 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 Horizon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Technology has no effect on the direction of OFS Capital i.e., OFS Capital and Horizon Technology go up and down completely randomly.
Pair Corralation between OFS Capital and Horizon Technology
Considering the 90-day investment horizon OFS Capital Corp is expected to generate 1.35 times more return on investment than Horizon Technology. However, OFS Capital is 1.35 times more volatile than Horizon Technology Finance. It trades about -0.04 of its potential returns per unit of risk. Horizon Technology Finance is currently generating about -0.11 per unit of risk. If you would invest 885.00 in OFS Capital Corp on August 24, 2024 and sell it today you would lose (81.00) from holding OFS Capital Corp or give up 9.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Capital Corp vs. Horizon Technology Finance
Performance |
| Timeline |
| OFS Capital Corp |
| Horizon Technology |
OFS Capital and Horizon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Capital and Horizon Technology
The main advantage of trading using opposite OFS Capital and Horizon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Capital position performs unexpectedly, Horizon Technology 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 Horizon Technology will offset losses from the drop in Horizon Technology'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 |
| Horizon Technology vs. Gladstone Capital | Horizon Technology vs. Gladstone Investment | Horizon Technology vs. Prospect Capital | Horizon Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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