Correlation Between Carlyle Secured and Trinity Capital

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

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

Diversification Opportunities for Carlyle Secured and Trinity Capital

-0.57

Correlation Coefficient

Carlyle Secured  Trinity Capital

Excellent diversification

The 3 months correlation between Carlyle and Trinity is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Capital and Carlyle Secured 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 Carlyle Secured Lending are associated (or correlated) with Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of Carlyle Secured i.e., Carlyle Secured and Trinity Capital go up and down completely randomly.

Pair Corralation between Carlyle Secured and Trinity Capital

Given the investment horizon of 90 days Carlyle Secured Lending is expected to under-perform the Trinity Capital. But the stock apears to be less risky and, when comparing its historical volatility, Carlyle Secured Lending is 1.05 times less risky than Trinity Capital. The stock trades about -0.07 of its potential returns per unit of risk. The Trinity Capital is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,430  in Trinity Capital on December 29, 2024 and sell it today you would earn a total of  153.00  from holding Trinity Capital or generate 10.7% return on investment over 90 days.

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

Carlyle Secured Lending  vs.  Trinity Capital

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

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

Trinity Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Trinity Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carlyle Secured and Trinity Capital

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

The idea behind Carlyle Secured Lending and Trinity Capital 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.