Correlation Between Rand Capital and Main Street
Can any of the company-specific risk be diversified away by investing in both Rand Capital and Main Street 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 Rand Capital and Main Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rand Capital Corp and Main Street Capital, you can compare the effects of market volatilities on Rand Capital and Main Street 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 Rand Capital with a short position of Main Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rand Capital and Main Street.
Diversification Opportunities for Rand Capital and Main Street
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Rand and Main is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Rand Capital Corp and Main Street Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Street Capital and Rand 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 Rand Capital Corp are associated (or correlated) with Main Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Street Capital has no effect on the direction of Rand Capital i.e., Rand Capital and Main Street go up and down completely randomly.
Pair Corralation between Rand Capital and Main Street
Given the investment horizon of 90 days Rand Capital is expected to generate 1.23 times less return on investment than Main Street. In addition to that, Rand Capital is 2.46 times more volatile than Main Street Capital. It trades about 0.04 of its total potential returns per unit of risk. Main Street Capital is currently generating about 0.12 per unit of volatility. If you would invest 3,094 in Main Street Capital on August 27, 2024 and sell it today you would earn a total of 2,303 from holding Main Street Capital or generate 74.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 88.1% |
| Values | Daily Returns |
Rand Capital Corp vs. Main Street Capital
Performance |
| Timeline |
| Rand Capital Corp |
| Main Street Capital |
Rand Capital and Main Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rand Capital and Main Street
The main advantage of trading using opposite Rand Capital and Main Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rand Capital position performs unexpectedly, Main Street 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 Main Street will offset losses from the drop in Main Street's long position.| Rand Capital vs. PowerUp Acquisition Corp | Rand Capital vs. Aurora Innovation | Rand Capital vs. HUMANA INC | Rand Capital vs. Aquagold International |
| Main Street vs. Gladstone Capital | Main Street vs. PennantPark Floating Rate | Main Street vs. Horizon Technology Finance | Main Street vs. Prospect 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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