Correlation Between 3i Group and Prospect Capital
Can any of the company-specific risk be diversified away by investing in both 3i Group 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 3i Group and Prospect Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3i Group plc and Prospect Capital, you can compare the effects of market volatilities on 3i Group 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 3i Group with a short position of Prospect Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3i Group and Prospect Capital.
Diversification Opportunities for 3i Group and Prospect Capital
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TGOPF and Prospect is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding 3i Group plc and Prospect Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prospect Capital and 3i 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 3i Group plc 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 3i Group i.e., 3i Group and Prospect Capital go up and down completely randomly.
Pair Corralation between 3i Group and Prospect Capital
Assuming the 90 days horizon 3i Group plc is expected to generate 1.63 times more return on investment than Prospect Capital. However, 3i Group is 1.63 times more volatile than Prospect Capital. It trades about 0.08 of its potential returns per unit of risk. Prospect Capital is currently generating about -0.01 per unit of risk. If you would invest 1,452 in 3i Group plc on January 25, 2024 and sell it today you would earn a total of 2,065 from holding 3i Group plc or generate 142.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.38% |
| Values | Daily Returns |
3i Group plc vs. Prospect Capital
Performance |
| Timeline |
| 3i Group plc |
| Prospect Capital |
3i Group and Prospect Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 3i Group and Prospect Capital
The main advantage of trading using opposite 3i Group and Prospect Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3i Group 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.| 3i Group vs. Tri Continental Closed | 3i Group vs. Adams Natural Resources | 3i Group vs. Adams Diversified Equity | 3i Group vs. Eaton Vance Tax |
| Prospect Capital vs. Gladstone Capital | Prospect Capital vs. Horizon Technology Finance | Prospect Capital vs. Gladstone Investment | Prospect Capital vs. Stellus Capital 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |