Correlation Between Portman Ridge and Investcorp Credit

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

Diversification Opportunities for Portman Ridge and Investcorp Credit

0.76

Correlation Coefficient

Portman Ridge  Investcorp Credit

Poor diversification

The 3 months correlation between Portman and Investcorp is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Portman Ridge Finance and Investcorp Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Credit 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 Investcorp Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Credit has no effect on the direction of Portman Ridge i.e., Portman Ridge and Investcorp Credit go up and down completely randomly.

Pair Corralation between Portman Ridge and Investcorp Credit

Given the investment horizon of 90 days Portman Ridge is expected to generate 1.66 times less return on investment than Investcorp Credit. But when comparing it to its historical volatility, Portman Ridge Finance is 1.16 times less risky than Investcorp Credit. It trades about 0.12 of its potential returns per unit of risk. Investcorp Credit Management is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  297.00  in Investcorp Credit Management on March 16, 2024 and sell it today you would earn a total of  28.00  from holding Investcorp Credit Management or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

Portman Ridge Finance  vs.  Investcorp Credit Management

Portman Ridge Finance

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Portman Ridge Finance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Portman Ridge may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Investcorp Credit

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Investcorp Credit Management are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Investcorp Credit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Portman Ridge and Investcorp Credit

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

The idea behind Portman Ridge Finance and Investcorp Credit Management 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.