Correlation Between Sixth Street and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Sixth Street and SLR Investment 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 Sixth Street and SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sixth Street Specialty and SLR Investment Corp, you can compare the effects of market volatilities on Sixth Street and SLR Investment 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 Sixth Street with a short position of SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sixth Street and SLR Investment.
Diversification Opportunities for Sixth Street and SLR Investment
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sixth and SLR is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Sixth Street Specialty and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and Sixth Street 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 Sixth Street Specialty are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Sixth Street i.e., Sixth Street and SLR Investment go up and down completely randomly.
Pair Corralation between Sixth Street and SLR Investment
Given the investment horizon of 90 days Sixth Street is expected to generate 1.66 times less return on investment than SLR Investment. But when comparing it to its historical volatility, Sixth Street Specialty is 1.1 times less risky than SLR Investment. It trades about 0.25 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 1,537 in SLR Investment Corp on September 1, 2024 and sell it today you would earn a total of 138.00 from holding SLR Investment Corp or generate 8.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sixth Street Specialty vs. SLR Investment Corp
Performance |
| Timeline |
| Sixth Street Specialty |
| SLR Investment Corp |
Sixth Street and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sixth Street and SLR Investment
The main advantage of trading using opposite Sixth Street and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sixth Street position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Sixth Street vs. Visa Class A | Sixth Street vs. Diamond Hill Investment | Sixth Street vs. Distoken Acquisition | Sixth Street vs. Associated Capital Group |
| SLR Investment vs. Horizon Technology Finance | SLR Investment vs. WhiteHorse Finance | SLR Investment vs. Gladstone Capital | SLR Investment vs. PennantPark Floating Rate |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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