Correlation Between Prospect Capital and Carlyle Secured

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

By analyzing existing cross correlation between Prospect Capital and Carlyle Secured Lending, you can compare the effects of market volatilities on Prospect Capital and Carlyle Secured 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 Carlyle Secured. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Carlyle Secured.

Diversification Opportunities for Prospect Capital and Carlyle Secured

-0.16

Correlation Coefficient

Prospect Capital  Carlyle Secured

Good diversification

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

Pair Corralation between Prospect Capital and Carlyle Secured

Given the investment horizon of 90 days Prospect Capital is expected to generate 0.81 times more return on investment than Carlyle Secured. However, Prospect Capital is 1.23 times less risky than Carlyle Secured. It trades about 0.0 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about -0.07 per unit of risk. If you would invest  413.00  in Prospect Capital on December 30, 2024 and sell it today you would lose (1.00) from holding Prospect Capital or give up 0.24% of portfolio value over 90 days.

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

Prospect Capital  vs.  Carlyle Secured Lending

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. In spite of rather sound technical and fundamental indicators, Prospect Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Secured Lending has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Prospect Capital and Carlyle Secured

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

The idea behind Prospect Capital and Carlyle Secured Lending 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.