Correlation Between New Mountain and Investcorp Credit

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

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

Diversification Opportunities for New Mountain and Investcorp Credit

0.16

Correlation Coefficient

New Mountain  Investcorp Credit

Average diversification

The 3 months correlation between New and Investcorp is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Investcorp Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Credit and New Mountain 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 New Mountain Finance are associated (or correlated) with Investcorp Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Credit has no effect on the direction of New Mountain i.e., New Mountain and Investcorp Credit go up and down completely randomly.

Pair Corralation between New Mountain and Investcorp Credit

Given the investment horizon of 90 days New Mountain is expected to generate 6.13 times less return on investment than Investcorp Credit. But when comparing it to its historical volatility, New Mountain Finance is 1.11 times less risky than Investcorp Credit. It trades about 0.02 of its potential returns per unit of risk. Investcorp Credit Management is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  303.00  in Investcorp Credit Management on December 28, 2024 and sell it today you would earn a total of  19.00  from holding Investcorp Credit Management or generate 6.27% return on investment over 90 days.

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

New Mountain Finance  vs.  Investcorp Credit Management

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 1 (%) 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.

Investcorp Credit

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain primary indicators, Investcorp Credit may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with New Mountain and Investcorp Credit

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

The idea behind New Mountain Finance and Investcorp Credit Management 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .