Correlation Between WhiteHorse Finance and Portman Ridge

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

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

Diversification Opportunities for WhiteHorse Finance and Portman Ridge

0.88

Correlation Coefficient

WhiteHorse Finance  Portman Ridge

Very poor diversification

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

Pair Corralation between WhiteHorse Finance and Portman Ridge

Considering the 90-day investment horizon WhiteHorse Finance is expected to generate 1.41 times more return on investment than Portman Ridge. However, WhiteHorse Finance is 1.41 times more volatile than Portman Ridge Finance. It trades about 0.16 of its potential returns per unit of risk. Portman Ridge Finance is currently generating about 0.08 per unit of risk. 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

WhiteHorse Finance  vs.  Portman Ridge Finance

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.

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.

Pair Trading with WhiteHorse Finance and Portman Ridge

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

The idea behind WhiteHorse Finance and Portman Ridge 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..