Correlation Between Lot78 and New Mountain

Can any of the company-specific risk be diversified away by investing in both Lot78 and New Mountain 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 Lot78 and New Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lot78 Inc and New Mountain Finance, you can compare the effects of market volatilities on Lot78 and New Mountain 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 Lot78 with a short position of New Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lot78 and New Mountain.

Diversification Opportunities for Lot78 and New Mountain

0.0

Correlation Coefficient

Lot78  New Mountain

Pay attention - limited upside

The 3 months correlation between Lot78 and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lot78 Inc and New Mountain Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Mountain Finance and Lot78 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 Lot78 Inc are associated (or correlated) with New Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Mountain Finance has no effect on the direction of Lot78 i.e., Lot78 and New Mountain go up and down completely randomly.

Pair Corralation between Lot78 and New Mountain

If you would invest  1,095  in New Mountain Finance on December 20, 2024 and sell it today you would earn a total of  15.00  from holding New Mountain Finance or generate 1.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Lot78 Inc  vs.  New Mountain Finance

Lot78 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lot78 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Lot78 is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

New Mountain Finance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Mountain Finance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, New Mountain is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Lot78 and New Mountain

The main advantage of trading using opposite Lot78 and New Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lot78 position performs unexpectedly, New Mountain 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 New Mountain will offset losses from the drop in New Mountain's long position.

The idea behind Lot78 Inc and New Mountain Finance 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.