Correlation Between New Mountain and Saratoga Investment
Can any of the company-specific risk be diversified away by investing in both New Mountain and Saratoga Investment 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 Saratoga Investment 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 Saratoga Investment Corp, you can compare the effects of market volatilities on New Mountain and Saratoga Investment 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 Saratoga Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Saratoga Investment.
Diversification Opportunities for New Mountain and Saratoga Investment
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Saratoga is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Saratoga Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saratoga Investment 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 Saratoga Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saratoga Investment Corp has no effect on the direction of New Mountain i.e., New Mountain and Saratoga Investment go up and down completely randomly.
Pair Corralation between New Mountain and Saratoga Investment
Given the investment horizon of 90 days New Mountain is expected to generate 1.19 times less return on investment than Saratoga Investment. But when comparing it to its historical volatility, New Mountain Finance is 1.48 times less risky than Saratoga Investment. It trades about 0.04 of its potential returns per unit of risk. Saratoga Investment Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,156 in Saratoga Investment Corp on September 2, 2024 and sell it today you would earn a total of 413.00 from holding Saratoga Investment Corp or generate 19.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Mountain Finance vs. Saratoga Investment Corp
Performance |
| Timeline |
| New Mountain Finance |
| Saratoga Investment Corp |
New Mountain and Saratoga Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Mountain and Saratoga Investment
The main advantage of trading using opposite New Mountain and Saratoga Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, Saratoga Investment 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 Saratoga Investment will offset losses from the drop in Saratoga Investment's long position.| New Mountain vs. BlackRock TCP Capital | New Mountain vs. Carlyle Secured Lending | New Mountain vs. Sixth Street Specialty | New Mountain vs. WhiteHorse Finance |
| 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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