Correlation Between Prospect Capital and DMY Squared

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

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

Diversification Opportunities for Prospect Capital and DMY Squared

-0.4

Correlation Coefficient

Prospect Capital  DMY Squared

Very good diversification

The 3 months correlation between Prospect and DMY is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and dMY Squared Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dMY Squared Technology and Prospect 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 Prospect Capital are associated (or correlated) with DMY Squared. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dMY Squared Technology has no effect on the direction of Prospect Capital i.e., Prospect Capital and DMY Squared go up and down completely randomly.

Pair Corralation between Prospect Capital and DMY Squared

Given the investment horizon of 90 days Prospect Capital is expected to under-perform the DMY Squared. But the stock apears to be less risky and, when comparing its historical volatility, Prospect Capital is 1.78 times less risky than DMY Squared. The stock trades about -0.11 of its potential returns per unit of risk. The dMY Squared Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,279  in dMY Squared Technology on May 2, 2025 and sell it today you would earn a total of  13.00  from holding dMY Squared Technology or generate 1.02% return on investment over 90 days.

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

Prospect Capital  vs.  dMY Squared Technology

Prospect Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prospect Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

dMY Squared Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in dMY Squared Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DMY Squared is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Prospect Capital and DMY Squared

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

The idea behind Prospect Capital and dMY Squared Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.