Correlation Between Saratoga Investment and Investor
Can any of the company-specific risk be diversified away by investing in both Saratoga Investment and Investor 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 Saratoga Investment and Investor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and Investor AB, you can compare the effects of market volatilities on Saratoga Investment and Investor 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 Saratoga Investment with a short position of Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and Investor.
Diversification Opportunities for Saratoga Investment and Investor
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Saratoga and Investor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment Corp and Investor AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB and Saratoga Investment 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 Saratoga Investment Corp are associated (or correlated) with Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB has no effect on the direction of Saratoga Investment i.e., Saratoga Investment and Investor go up and down completely randomly.
Pair Corralation between Saratoga Investment and Investor
Considering the 90-day investment horizon Saratoga Investment Corp is expected to generate 0.51 times more return on investment than Investor. However, Saratoga Investment Corp is 1.96 times less risky than Investor. It trades about -0.02 of its potential returns per unit of risk. Investor AB is currently generating about -0.33 per unit of risk. If you would invest 2,283 in Saratoga Investment Corp on January 20, 2024 and sell it today you would lose (10.00) from holding Saratoga Investment Corp or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Saratoga Investment Corp vs. Investor AB
Performance |
| Timeline |
| Saratoga Investment Corp |
| Investor AB |
Saratoga Investment and Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Saratoga Investment and Investor
The main advantage of trading using opposite Saratoga Investment and Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment position performs unexpectedly, Investor 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 Investor will offset losses from the drop in Investor's long position.| Saratoga Investment vs. New Mountain Finance | Saratoga Investment vs. BlackRock TCP Capital | Saratoga Investment vs. Carlyle Secured Lending | Saratoga Investment vs. Sixth Street Specialty |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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