Correlation Between Prospect Capital and Crescent Capital
Can any of the company-specific risk be diversified away by investing in both Prospect Capital and Crescent 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 Prospect Capital and Crescent Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospect Capital and Crescent Capital BDC, you can compare the effects of market volatilities on Prospect Capital and Crescent 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 Prospect Capital with a short position of Crescent Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Crescent Capital.
Diversification Opportunities for Prospect Capital and Crescent Capital
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prospect and Crescent is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and Crescent Capital BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Capital BDC and Prospect 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 Prospect Capital are associated (or correlated) with Crescent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Capital BDC has no effect on the direction of Prospect Capital i.e., Prospect Capital and Crescent Capital go up and down completely randomly.
Pair Corralation between Prospect Capital and Crescent Capital
Given the investment horizon of 90 days Prospect Capital is expected to generate 32.45 times less return on investment than Crescent Capital. But when comparing it to its historical volatility, Prospect Capital is 1.28 times less risky than Crescent Capital. It trades about 0.0 of its potential returns per unit of risk. Crescent Capital BDC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,921 in Crescent Capital BDC on November 3, 2024 and sell it today you would earn a total of 37.00 from holding Crescent Capital BDC or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospect Capital vs. Crescent Capital BDC
Performance |
| Timeline |
| Prospect Capital |
| Crescent Capital BDC |
Prospect Capital and Crescent Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospect Capital and Crescent Capital
The main advantage of trading using opposite Prospect Capital and Crescent Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospect Capital position performs unexpectedly, Crescent 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 Crescent Capital will offset losses from the drop in Crescent Capital's long position.| Prospect Capital vs. Gladstone Capital | Prospect Capital vs. Horizon Technology Finance | Prospect Capital vs. Gladstone Investment | Prospect Capital vs. Stellus Capital Investment |
| Crescent Capital vs. BlackRock TCP Capital | Crescent Capital vs. Triplepoint Venture Growth | Crescent Capital vs. Sixth Street Specialty | Crescent Capital vs. Golub Capital BDC |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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