Correlation Between New Mountain and P10

Can any of the company-specific risk be diversified away by investing in both New Mountain and P10 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 P10 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 P10 Inc, you can compare the effects of market volatilities on New Mountain and P10 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 P10. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and P10.

Diversification Opportunities for New Mountain and P10

0.1

Correlation Coefficient

New Mountain  P10

Average diversification

The 3 months correlation between New and P10 is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and P10 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P10 Inc 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 P10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P10 Inc has no effect on the direction of New Mountain i.e., New Mountain and P10 go up and down completely randomly.

Pair Corralation between New Mountain and P10

Given the investment horizon of 90 days New Mountain Finance is expected to under-perform the P10. But the stock apears to be less risky and, when comparing its historical volatility, New Mountain Finance is 1.92 times less risky than P10. The stock trades about -0.03 of its potential returns per unit of risk. The P10 Inc is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,051  in P10 Inc on September 15, 2024 and sell it today you would earn a total of  274.00  from holding P10 Inc or generate 26.07% 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.  P10 Inc

New Mountain Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Mountain Finance has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

P10 Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in P10 Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, P10 showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Mountain and P10

The main advantage of trading using opposite New Mountain and P10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, P10 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 P10 will offset losses from the drop in P10's long position.

The idea behind New Mountain Finance and P10 Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.