Correlation Between Stellus Capital and Royalty Management
Can any of the company-specific risk be diversified away by investing in both Stellus Capital and Royalty Management 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 Stellus Capital and Royalty Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellus Capital Investment and Royalty Management Holding, you can compare the effects of market volatilities on Stellus Capital and Royalty Management 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 Stellus Capital with a short position of Royalty Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellus Capital and Royalty Management.
Diversification Opportunities for Stellus Capital and Royalty Management
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Stellus and Royalty is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Stellus Capital Investment and Royalty Management Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalty Management and Stellus 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 Stellus Capital Investment are associated (or correlated) with Royalty Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalty Management has no effect on the direction of Stellus Capital i.e., Stellus Capital and Royalty Management go up and down completely randomly.
Pair Corralation between Stellus Capital and Royalty Management
Considering the 90-day investment horizon Stellus Capital Investment is expected to generate 0.13 times more return on investment than Royalty Management. However, Stellus Capital Investment is 7.53 times less risky than Royalty Management. It trades about 0.15 of its potential returns per unit of risk. Royalty Management Holding is currently generating about -0.08 per unit of risk. If you would invest 1,363 in Stellus Capital Investment on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Stellus Capital Investment or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Stellus Capital Investment vs. Royalty Management Holding
Performance |
| Timeline |
| Stellus Capital Inve |
| Royalty Management |
Stellus Capital and Royalty Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellus Capital and Royalty Management
The main advantage of trading using opposite Stellus Capital and Royalty Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellus Capital position performs unexpectedly, Royalty Management 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 Royalty Management will offset losses from the drop in Royalty Management's long position.| Stellus Capital vs. PennantPark Floating Rate | Stellus Capital vs. Gladstone Capital | Stellus Capital vs. Gladstone Investment | Stellus Capital vs. Prospect Capital |
| Royalty Management vs. Gladstone Investment | Royalty Management vs. Stellus Capital Investment | Royalty Management vs. Prospect Capital | Royalty Management vs. Gladstone 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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