Correlation Between Binah Capital and Prospect Capital

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

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

Diversification Opportunities for Binah Capital and Prospect Capital

0.16

Correlation Coefficient

Binah Capital  Prospect Capital

Average diversification

The 3 months correlation between Binah and Prospect is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Binah Capital Group, and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Binah 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 Binah Capital Group, are associated (or correlated) with Prospect Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prospect Capital has no effect on the direction of Binah Capital i.e., Binah Capital and Prospect Capital go up and down completely randomly.

Pair Corralation between Binah Capital and Prospect Capital

Assuming the 90 days horizon Binah Capital Group, is expected to under-perform the Prospect Capital. In addition to that, Binah Capital is 9.14 times more volatile than Prospect Capital. It trades about -0.13 of its total potential returns per unit of risk. Prospect Capital is currently generating about -0.32 per unit of volatility. If you would invest  1,932  in Prospect Capital on September 24, 2024 and sell it today you would lose (140.00) from holding Prospect Capital or give up 7.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	45.0%
Values	Daily Returns

Binah Capital Group,  vs.  Prospect Capital

Binah Capital Group,

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binah Capital Group, are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Binah Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Prospect Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prospect Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Binah Capital and Prospect Capital

The main advantage of trading using opposite Binah Capital and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binah Capital position performs unexpectedly, Prospect Capital 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 Prospect Capital will offset losses from the drop in Prospect Capital's long position.

The idea behind Binah Capital Group, and Prospect Capital 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.