Correlation Between Prospect Capital and Solstice Advanced

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

By analyzing existing cross correlation between Prospect Capital and Solstice Advanced Materials,, you can compare the effects of market volatilities on Prospect Capital and Solstice Advanced 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 Solstice Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prospect Capital and Solstice Advanced.

Diversification Opportunities for Prospect Capital and Solstice Advanced

0.18

Correlation Coefficient

Prospect Capital  Solstice Advanced

Average diversification

The 3 months correlation between Prospect and Solstice is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prospect Capital and Solstice Advanced Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstice Advanced 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 Solstice Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstice Advanced has no effect on the direction of Prospect Capital i.e., Prospect Capital and Solstice Advanced go up and down completely randomly.

Pair Corralation between Prospect Capital and Solstice Advanced

Given the investment horizon of 90 days Prospect Capital is expected to under-perform the Solstice Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Prospect Capital is 1.91 times less risky than Solstice Advanced. The stock trades about -0.02 of its potential returns per unit of risk. The Solstice Advanced Materials, is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,840  in Solstice Advanced Materials, on September 17, 2025 and sell it today you would earn a total of  37.00  from holding Solstice Advanced Materials, or generate 0.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

Prospect Capital  vs.  Solstice Advanced Materials,

Prospect Capital

Risk-Adjusted Performance

Weakest

Over the last 90 days Prospect Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Prospect Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Solstice Advanced

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solstice Advanced Materials, are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Solstice Advanced is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Prospect Capital and Solstice Advanced

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

The idea behind Prospect Capital and Solstice Advanced Materials, 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.