Correlation Between New Mountain and BlackRock TCP
Can any of the company-specific risk be diversified away by investing in both New Mountain and BlackRock TCP 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 BlackRock TCP 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 BlackRock TCP Capital, you can compare the effects of market volatilities on New Mountain and BlackRock TCP 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 BlackRock TCP. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and BlackRock TCP.
Diversification Opportunities for New Mountain and BlackRock TCP
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and BlackRock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and BlackRock TCP Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock TCP Capital 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 BlackRock TCP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock TCP Capital has no effect on the direction of New Mountain i.e., New Mountain and BlackRock TCP go up and down completely randomly.
Pair Corralation between New Mountain and BlackRock TCP
Given the investment horizon of 90 days New Mountain Finance is expected to generate 0.57 times more return on investment than BlackRock TCP. However, New Mountain Finance is 1.77 times less risky than BlackRock TCP. It trades about 0.02 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about -0.01 per unit of risk. If you would invest 1,054 in New Mountain Finance on October 20, 2024 and sell it today you would earn a total of 73.00 from holding New Mountain Finance or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Mountain Finance vs. BlackRock TCP Capital
Performance |
| Timeline |
| New Mountain Finance |
| BlackRock TCP Capital |
New Mountain and BlackRock TCP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Mountain and BlackRock TCP
The main advantage of trading using opposite New Mountain and BlackRock TCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, BlackRock TCP 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 BlackRock TCP will offset losses from the drop in BlackRock TCP'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 |
| BlackRock TCP vs. Triplepoint Venture Growth | BlackRock TCP vs. Sixth Street Specialty | BlackRock TCP vs. Golub Capital BDC | BlackRock TCP 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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