Correlation Between Equus Total and Rand Capital

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

By analyzing existing cross correlation between Equus Total Return and Rand Capital Corp, you can compare the effects of market volatilities on Equus Total and Rand 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 Equus Total with a short position of Rand Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equus Total and Rand Capital.

Diversification Opportunities for Equus Total and Rand Capital

-0.29

Correlation Coefficient

Equus Total  Rand Capital

Very good diversification

The 3 months correlation between Equus and Rand is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Equus Total Return and Rand Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rand Capital Corp and Equus Total 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 Equus Total Return are associated (or correlated) with Rand Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rand Capital Corp has no effect on the direction of Equus Total i.e., Equus Total and Rand Capital go up and down completely randomly.

Pair Corralation between Equus Total and Rand Capital

Considering the 90-day investment horizon Equus Total Return is expected to under-perform the Rand Capital. In addition to that, Equus Total is 1.05 times more volatile than Rand Capital Corp. It trades about -0.12 of its total potential returns per unit of risk. Rand Capital Corp is currently generating about 0.15 per unit of volatility. If you would invest  1,660  in Rand Capital Corp on September 12, 2024 and sell it today you would earn a total of  425.00  from holding Rand Capital Corp or generate 25.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Equus Total Return  vs.  Rand Capital Corp

Equus Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equus Total Return has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rand Capital Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rand Capital Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Rand Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equus Total and Rand Capital

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

The idea behind Equus Total Return and Rand Capital Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.