Correlation Between Associated Capital and SLR Investment

Can any of the company-specific risk be diversified away by investing in both Associated Capital 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 Associated Capital and SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associated Capital Group and SLR Investment Corp, you can compare the effects of market volatilities on Associated Capital 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 Associated Capital with a short position of SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated Capital and SLR Investment.

Diversification Opportunities for Associated Capital and SLR Investment

0.73

Correlation Coefficient

Associated Capital  SLR Investment

Poor diversification

The 3 months correlation between Associated and SLR is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Associated Capital Group 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 Associated 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 Associated Capital Group 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 Associated Capital i.e., Associated Capital and SLR Investment go up and down completely randomly.

Pair Corralation between Associated Capital and SLR Investment

Allowing for the 90-day total investment horizon Associated Capital is expected to generate 1.86 times less return on investment than SLR Investment. In addition to that, Associated Capital is 2.44 times more volatile than SLR Investment Corp. It trades about 0.05 of its total potential returns per unit of risk. SLR Investment Corp is currently generating about 0.24 per unit of volatility. If you would invest  1,691  in SLR Investment Corp on December 2, 2024 and sell it today you would earn a total of  72.00  from holding SLR Investment Corp or generate 4.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Associated Capital Group  vs.  SLR Investment Corp

Associated Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Associated Capital Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Associated Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

SLR Investment Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Associated Capital and SLR Investment

The main advantage of trading using opposite Associated Capital and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated Capital 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.

The idea behind Associated Capital Group and SLR Investment Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.