Correlation Between New Mountain and OFS Capital
Can any of the company-specific risk be diversified away by investing in both New Mountain and OFS Capital 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 New Mountain and OFS Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Mountain Finance and OFS Capital Corp, you can compare the effects of market volatilities on New Mountain and OFS Capital 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 New Mountain with a short position of OFS Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and OFS Capital.
Diversification Opportunities for New Mountain and OFS Capital
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and OFS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and OFS Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFS Capital Corp and New Mountain 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 New Mountain Finance are associated (or correlated) with OFS Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFS Capital Corp has no effect on the direction of New Mountain i.e., New Mountain and OFS Capital go up and down completely randomly.
Pair Corralation between New Mountain and OFS Capital
Given the investment horizon of 90 days New Mountain Finance is expected to generate 0.49 times more return on investment than OFS Capital. However, New Mountain Finance is 2.04 times less risky than OFS Capital. It trades about 0.04 of its potential returns per unit of risk. OFS Capital Corp is currently generating about 0.01 per unit of risk. If you would invest 1,004 in New Mountain Finance on August 27, 2024 and sell it today you would earn a total of 172.00 from holding New Mountain Finance or generate 17.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Mountain Finance vs. OFS Capital Corp
Performance |
| Timeline |
| New Mountain Finance |
| OFS Capital Corp |
New Mountain and OFS Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Mountain and OFS Capital
The main advantage of trading using opposite New Mountain and OFS Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, OFS Capital 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 OFS Capital will offset losses from the drop in OFS Capital's long position.| New Mountain vs. PowerUp Acquisition Corp | New Mountain vs. Aurora Innovation | New Mountain vs. HUMANA INC | New Mountain vs. Aquagold International |
| OFS Capital vs. Stellus Capital Investment | OFS Capital vs. Fidus Investment Corp | OFS Capital vs. Monroe Capital Corp | OFS Capital vs. New Mountain Finance |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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