Correlation Between Crescent Capital and Capital Southwest

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

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

Diversification Opportunities for Crescent Capital and Capital Southwest

-0.05

Correlation Coefficient

Crescent Capital  Capital Southwest

Good diversification

The 3 months correlation between Crescent and Capital is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Crescent Capital BDC and Capital Southwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Southwest and Crescent 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 Crescent Capital BDC are associated (or correlated) with Capital Southwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Southwest has no effect on the direction of Crescent Capital i.e., Crescent Capital and Capital Southwest go up and down completely randomly.

Pair Corralation between Crescent Capital and Capital Southwest

Given the investment horizon of 90 days Crescent Capital is expected to generate 14.59 times less return on investment than Capital Southwest. In addition to that, Crescent Capital is 1.28 times more volatile than Capital Southwest. It trades about 0.01 of its total potential returns per unit of risk. Capital Southwest is currently generating about 0.15 per unit of volatility. If you would invest  2,057  in Capital Southwest on May 19, 2025 and sell it today you would earn a total of  189.00  from holding Capital Southwest or generate 9.19% return on investment over 90 days.

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

Crescent Capital BDC  vs.  Capital Southwest

Crescent Capital BDC

Risk-Adjusted Performance

Weakest

Over the last 90 days Crescent Capital BDC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Crescent Capital is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Capital Southwest

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capital Southwest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Capital Southwest may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Crescent Capital and Capital Southwest

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

The idea behind Crescent Capital BDC and Capital Southwest 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 CEOs Directory module to screen CEOs from public companies around the world.