Correlation Between Cohen Steers and Prospect Capital

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

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

Diversification Opportunities for Cohen Steers and Prospect Capital

0.89

Correlation Coefficient

Cohen Steers  Prospect Capital

Very poor diversification

The 3 months correlation between Cohen and Prospect is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and Cohen Steers 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 Cohen Steers 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 Cohen Steers i.e., Cohen Steers and Prospect Capital go up and down completely randomly.

Pair Corralation between Cohen Steers and Prospect Capital

Considering the 90-day investment horizon Cohen Steers is expected to under-perform the Prospect Capital. But the stock apears to be less risky and, when comparing its historical volatility, Cohen Steers is 1.14 times less risky than Prospect Capital. The stock trades about -0.18 of its potential returns per unit of risk. The Prospect Capital is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,638  in Prospect Capital on November 28, 2024 and sell it today you would earn a total of  69.00  from holding Prospect Capital or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Cohen Steers  vs.  Prospect Capital

Cohen Steers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cohen Steers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Prospect Capital

Risk-Adjusted Performance

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 Cohen Steers and Prospect Capital

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

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.