Correlation Between Prospect Capital and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both Prospect Capital and Western Acquisition 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 Western Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospect Capital and Western Acquisition Ventures, you can compare the effects of market volatilities on Prospect Capital and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Western Acquisition.
Diversification Opportunities for Prospect Capital and Western Acquisition
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prospect and Western is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Prospect Capital i.e., Prospect Capital and Western Acquisition go up and down completely randomly.
Pair Corralation between Prospect Capital and Western Acquisition
Given the investment horizon of 90 days Prospect Capital is expected to generate 59.98 times less return on investment than Western Acquisition. But when comparing it to its historical volatility, Prospect Capital is 4.23 times less risky than Western Acquisition. It trades about 0.02 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,154 in Western Acquisition Ventures on November 4, 2024 and sell it today you would earn a total of 186.00 from holding Western Acquisition Ventures or generate 16.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Prospect Capital vs. Western Acquisition Ventures
Performance |
| Timeline |
| Prospect Capital |
| Western Acquisition |
Prospect Capital and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prospect Capital and Western Acquisition
The main advantage of trading using opposite Prospect Capital and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospect Capital position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition'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 |
| Western Acquisition vs. Portillos | Western Acquisition vs. Emerson Electric | Western Acquisition vs. Starbucks | Western Acquisition vs. Oasis Hotel Resort |
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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