Correlation Between Portman Ridge and WhiteHorse Finance

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

Diversification Opportunities for Portman Ridge and WhiteHorse Finance

0.88

Correlation Coefficient

Portman Ridge  WhiteHorse Finance

Very poor diversification

The 3 months correlation between Portman and WhiteHorse is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Portman Ridge Finance and WhiteHorse Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteHorse Finance 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 WhiteHorse Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteHorse Finance has no effect on the direction of Portman Ridge i.e., Portman Ridge and WhiteHorse Finance go up and down completely randomly.

Pair Corralation between Portman Ridge and WhiteHorse Finance

Given the investment horizon of 90 days Portman Ridge is expected to generate 2.84 times less return on investment than WhiteHorse Finance. But when comparing it to its historical volatility, Portman Ridge Finance is 1.41 times less risky than WhiteHorse Finance. It trades about 0.08 of its potential returns per unit of risk. WhiteHorse Finance is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,012  in WhiteHorse Finance on December 1, 2024 and sell it today you would earn a total of  117.00  from holding WhiteHorse Finance or generate 11.56% return on investment over 90 days.

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

Portman Ridge Finance  vs.  WhiteHorse Finance

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.

WhiteHorse Finance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WhiteHorse Finance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, WhiteHorse Finance may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Portman Ridge and WhiteHorse Finance

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

The idea behind Portman Ridge Finance and WhiteHorse 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.