Correlation Between Portman Ridge and Carlyle Secured

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

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

Diversification Opportunities for Portman Ridge and Carlyle Secured

-0.08

Correlation Coefficient

Portman Ridge  Carlyle Secured

Good diversification

The 3 months correlation between Portman and Carlyle is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Portman Ridge Finance 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 Portman Ridge 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 Portman Ridge Finance 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 Portman Ridge i.e., Portman Ridge and Carlyle Secured go up and down completely randomly.

Pair Corralation between Portman Ridge and Carlyle Secured

Given the investment horizon of 90 days Portman Ridge is expected to generate 1.22 times less return on investment than Carlyle Secured. But when comparing it to its historical volatility, Portman Ridge Finance is 1.31 times less risky than Carlyle Secured. It trades about 0.08 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,698  in Carlyle Secured Lending on December 1, 2024 and sell it today you would earn a total of  79.00  from holding Carlyle Secured Lending or generate 4.65% return on investment over 90 days.

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

Portman Ridge Finance  vs.  Carlyle Secured Lending

Portman Ridge Finance

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Portman Ridge Finance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Portman Ridge is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Carlyle Secured Lending

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Secured Lending are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Portman Ridge and Carlyle Secured

The main advantage of trading using opposite Portman Ridge and Carlyle Secured positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Portman Ridge 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 Portman Ridge Finance 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.