Correlation Between Embrace Change and Golub Capital

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

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

Diversification Opportunities for Embrace Change and Golub Capital

-0.3

Correlation Coefficient

Embrace Change  Golub Capital

Very good diversification

The 3 months correlation between Embrace and Golub is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Golub Capital BDC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golub Capital BDC and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with Golub Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golub Capital BDC has no effect on the direction of Embrace Change i.e., Embrace Change and Golub Capital go up and down completely randomly.

Pair Corralation between Embrace Change and Golub Capital

Assuming the 90 days horizon Embrace Change Acquisition is expected to under-perform the Golub Capital. But the stock apears to be less risky and, when comparing its historical volatility, Embrace Change Acquisition is 1.11 times less risky than Golub Capital. The stock trades about -0.05 of its potential returns per unit of risk. The Golub Capital BDC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,485  in Golub Capital BDC on September 3, 2024 and sell it today you would earn a total of  74.00  from holding Golub Capital BDC or generate 4.98% return on investment over 90 days.

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

Embrace Change Acquisition  vs.  Golub Capital BDC

Embrace Change Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Embrace Change Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Embrace Change is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Golub Capital BDC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 7 (%) 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.

Pair Trading with Embrace Change and Golub Capital

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

The idea behind Embrace Change Acquisition and Golub 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.