Correlation Between Prospect Capital and SuRo Capital
Can any of the company-specific risk be diversified away by investing in both Prospect Capital and SuRo 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 Prospect Capital and SuRo Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prospect Capital and SuRo Capital Corp, you can compare the effects of market volatilities on Prospect Capital and SuRo 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 Prospect Capital with a short position of SuRo Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and SuRo Capital.
Diversification Opportunities for Prospect Capital and SuRo Capital
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prospect and SuRo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and SuRo Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SuRo Capital Corp and Prospect 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 Prospect Capital are associated (or correlated) with SuRo Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SuRo Capital Corp has no effect on the direction of Prospect Capital i.e., Prospect Capital and SuRo Capital go up and down completely randomly.
Pair Corralation between Prospect Capital and SuRo Capital
Assuming the 90 days trading horizon Prospect Capital is expected to generate 3.62 times more return on investment than SuRo Capital. However, Prospect Capital is 3.62 times more volatile than SuRo Capital Corp. It trades about 0.04 of its potential returns per unit of risk. SuRo Capital Corp is currently generating about 0.07 per unit of risk. If you would invest 1,306 in Prospect Capital on September 24, 2024 and sell it today you would earn a total of 486.00 from holding Prospect Capital or generate 37.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.8% |
Values | Daily Returns |
Prospect Capital vs. SuRo Capital Corp
Performance |
Timeline |
Prospect Capital |
SuRo Capital Corp |
Prospect Capital and SuRo Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Prospect Capital and SuRo Capital
The main advantage of trading using opposite Prospect Capital and SuRo Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prospect Capital position performs unexpectedly, SuRo 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 SuRo Capital will offset losses from the drop in SuRo Capital's long position.Prospect Capital vs. PennyMac Mortgage Investment | Prospect Capital vs. SiriusPoint | Prospect Capital vs. ARMOUR Residential REIT | Prospect Capital vs. Ready Capital |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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