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

0.24

Correlation Coefficient

Portman Ridge  Carlyle Secured

Modest diversification

The 3 months correlation between Portman and Carlyle is 0.24. 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 Finance is expected to under-perform the Carlyle Secured. In addition to that, Portman Ridge is 1.04 times more volatile than Carlyle Secured Lending. It trades about -0.1 of its total potential returns per unit of risk. Carlyle Secured Lending is currently generating about -0.07 per unit of volatility. If you would invest  1,773  in Carlyle Secured Lending on December 29, 2024 and sell it today you would lose (101.00) from holding Carlyle Secured Lending or give up 5.7% of portfolio value over 90 days.

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

Portman Ridge Finance  vs.  Carlyle Secured Lending

Portman Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Portman Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.