Correlation Between ZAIS Group and American Capital

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

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

Diversification Opportunities for ZAIS Group and American Capital

0.0

Correlation Coefficient

ZAIS Group  American Capital

Pay attention - limited upside

The 3 months correlation between ZAIS and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ZAIS Group Holdings and American Capital Senior in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Capital Senior and ZAIS Group 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 ZAIS Group Holdings are associated (or correlated) with American Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Capital Senior has no effect on the direction of ZAIS Group i.e., ZAIS Group and American Capital go up and down completely randomly.

Pair Corralation between ZAIS Group and American Capital

If you would invest (100.00) in American Capital Senior on February 3, 2024 and sell it today you would earn a total of  100.00  from holding American Capital Senior or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ZAIS Group Holdings  vs.  American Capital Senior

ZAIS Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZAIS Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, ZAIS Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

American Capital Senior

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Capital Senior has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, American Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ZAIS Group and American Capital

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

The idea behind ZAIS Group Holdings and American Capital Senior 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.