Correlation Between Golub Capital and Crescent Capital

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

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

Diversification Opportunities for Golub Capital and Crescent Capital

0.34

Correlation Coefficient

Golub Capital  Crescent Capital

Weak diversification

The 3 months correlation between Golub and Crescent is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC and Crescent Capital BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crescent Capital BDC and Golub 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 Golub Capital BDC are associated (or correlated) with Crescent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crescent Capital BDC has no effect on the direction of Golub Capital i.e., Golub Capital and Crescent Capital go up and down completely randomly.

Pair Corralation between Golub Capital and Crescent Capital

Given the investment horizon of 90 days Golub Capital BDC is expected to generate 0.68 times more return on investment than Crescent Capital. However, Golub Capital BDC is 1.46 times less risky than Crescent Capital. It trades about 0.07 of its potential returns per unit of risk. Crescent Capital BDC is currently generating about -0.12 per unit of risk. If you would invest  1,474  in Golub Capital BDC on December 29, 2024 and sell it today you would earn a total of  51.00  from holding Golub Capital BDC or generate 3.46% return on investment over 90 days.

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

Golub Capital BDC  vs.  Crescent Capital BDC

Golub Capital BDC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Golub Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Crescent Capital BDC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Crescent Capital BDC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Golub Capital and Crescent Capital

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

The idea behind Golub Capital BDC and Crescent Capital BDC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.