Correlation Between OFS Capital and Monroe Capital
Can any of the company-specific risk be diversified away by investing in both OFS Capital and Monroe 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 OFS Capital and Monroe Capital 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 Monroe Capital Corp, you can compare the effects of market volatilities on OFS Capital and Monroe 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 OFS Capital with a short position of Monroe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of OFS Capital and Monroe Capital.
Diversification Opportunities for OFS Capital and Monroe Capital
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OFS and Monroe is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding OFS Capital Corp and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp 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 Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of OFS Capital i.e., OFS Capital and Monroe Capital go up and down completely randomly.
Pair Corralation between OFS Capital and Monroe Capital
Considering the 90-day investment horizon OFS Capital is expected to generate 2.79 times less return on investment than Monroe Capital. But when comparing it to its historical volatility, OFS Capital Corp is 1.26 times less risky than Monroe Capital. It trades about 0.06 of its potential returns per unit of risk. Monroe Capital Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 778.00 in Monroe Capital Corp on October 26, 2024 and sell it today you would earn a total of 80.00 from holding Monroe Capital Corp or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OFS Capital Corp vs. Monroe Capital Corp
Performance |
| Timeline |
| OFS Capital Corp |
| Monroe Capital Corp |
OFS Capital and Monroe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OFS Capital and Monroe Capital
The main advantage of trading using opposite OFS Capital and Monroe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Capital position performs unexpectedly, Monroe 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 Monroe Capital will offset losses from the drop in Monroe Capital'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 |
| Monroe Capital vs. WhiteHorse Finance | Monroe Capital vs. OFS Capital Corp | Monroe Capital vs. Fidus Investment Corp | Monroe Capital vs. BlackRock TCP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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