Correlation Between New Mountain and Trinity Capital
Can any of the company-specific risk be diversified away by investing in both New Mountain and Trinity 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 Trinity 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 Trinity Capital, you can compare the effects of market volatilities on New Mountain and Trinity 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 Trinity Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Trinity Capital.
Diversification Opportunities for New Mountain and Trinity Capital
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Trinity is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity 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 Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of New Mountain i.e., New Mountain and Trinity Capital go up and down completely randomly.
Pair Corralation between New Mountain and Trinity Capital
Given the investment horizon of 90 days New Mountain is expected to generate 4.01 times less return on investment than Trinity Capital. But when comparing it to its historical volatility, New Mountain Finance is 2.02 times less risky than Trinity Capital. It trades about 0.04 of its potential returns per unit of risk. Trinity Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 762.00 in Trinity Capital on August 27, 2024 and sell it today you would earn a total of 672.00 from holding Trinity Capital or generate 88.19% 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. Trinity Capital
Performance |
| Timeline |
| New Mountain Finance |
| Trinity Capital |
New Mountain and Trinity Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Mountain and Trinity Capital
The main advantage of trading using opposite New Mountain and Trinity Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, Trinity 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 Trinity Capital will offset losses from the drop in Trinity 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 |
| Trinity Capital vs. PowerUp Acquisition Corp | Trinity Capital vs. Aurora Innovation | Trinity Capital vs. HUMANA INC | Trinity Capital vs. Aquagold International |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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