Correlation Between Prospect Capital and Logan Ridge
Can any of the company-specific risk be diversified away by investing in both Prospect Capital and Logan Ridge 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 Logan Ridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospect Capital and Logan Ridge Finance, you can compare the effects of market volatilities on Prospect Capital and Logan Ridge 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 Logan Ridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Logan Ridge.
Diversification Opportunities for Prospect Capital and Logan Ridge
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prospect and Logan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and Logan Ridge Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logan Ridge Finance 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 Logan Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logan Ridge Finance has no effect on the direction of Prospect Capital i.e., Prospect Capital and Logan Ridge go up and down completely randomly.
Pair Corralation between Prospect Capital and Logan Ridge
Given the investment horizon of 90 days Prospect Capital is expected to generate 1.26 times more return on investment than Logan Ridge. However, Prospect Capital is 1.26 times more volatile than Logan Ridge Finance. It trades about 0.16 of its potential returns per unit of risk. Logan Ridge Finance is currently generating about 0.02 per unit of risk. If you would invest 423.00 in Prospect Capital on September 13, 2024 and sell it today you would earn a total of 24.00 from holding Prospect Capital or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prospect Capital vs. Logan Ridge Finance
Performance |
| Timeline |
| Prospect Capital |
| Logan Ridge Finance |
Prospect Capital and Logan Ridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospect Capital and Logan Ridge
The main advantage of trading using opposite Prospect Capital and Logan Ridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospect Capital position performs unexpectedly, Logan Ridge 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 Logan Ridge will offset losses from the drop in Logan Ridge'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 |
| Logan Ridge vs. Badger Infrastructure Solutions | Logan Ridge vs. Portman Ridge Finance | Logan Ridge vs. Inotiv Inc | Logan Ridge vs. Phenixfin |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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