Correlation Between Golub Capital and Carlyle Secured

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

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

Diversification Opportunities for Golub Capital and Carlyle Secured

0.88

Correlation Coefficient

Golub Capital  Carlyle Secured

Very poor diversification

The 3 months correlation between Golub and Carlyle is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC and Carlyle Secured Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Secured Lending and Golub 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 Golub Capital BDC are associated (or correlated) with Carlyle Secured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Secured Lending has no effect on the direction of Golub Capital i.e., Golub Capital and Carlyle Secured go up and down completely randomly.

Pair Corralation between Golub Capital and Carlyle Secured

Given the investment horizon of 90 days Golub Capital is expected to generate 2.26 times less return on investment than Carlyle Secured. But when comparing it to its historical volatility, Golub Capital BDC is 1.31 times less risky than Carlyle Secured. It trades about 0.14 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,498  in Carlyle Secured Lending on February 22, 2024 and sell it today you would earn a total of  285.00  from holding Carlyle Secured Lending or generate 19.03% return on investment over 90 days.

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

Golub Capital BDC  vs.  Carlyle Secured Lending

Golub Capital BDC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Golub Capital may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Carlyle Secured Lending

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Secured Lending are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Carlyle Secured exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golub Capital and Carlyle Secured

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

The idea behind Golub Capital BDC and Carlyle Secured Lending 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.