Correlation Between Regional Management and New Mountain
Can any of the company-specific risk be diversified away by investing in both Regional Management and New Mountain 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 Regional Management and New Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and New Mountain Finance, you can compare the effects of market volatilities on Regional Management and New Mountain 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 Regional Management with a short position of New Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and New Mountain.
Diversification Opportunities for Regional Management and New Mountain
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and New is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and New Mountain Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Mountain Finance and Regional Management 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 Regional Management Corp are associated (or correlated) with New Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Mountain Finance has no effect on the direction of Regional Management i.e., Regional Management and New Mountain go up and down completely randomly.
Pair Corralation between Regional Management and New Mountain
Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 3.88 times more return on investment than New Mountain. However, Regional Management is 3.88 times more volatile than New Mountain Finance. It trades about 0.07 of its potential returns per unit of risk. New Mountain Finance is currently generating about 0.01 per unit of risk. If you would invest 2,023 in Regional Management Corp on August 24, 2024 and sell it today you would earn a total of 978.00 from holding Regional Management Corp or generate 48.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Regional Management Corp vs. New Mountain Finance
Performance |
| Timeline |
| Regional Management Corp |
| New Mountain Finance |
Regional Management and New Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and New Mountain
The main advantage of trading using opposite Regional Management and New Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, New Mountain 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 New Mountain will offset losses from the drop in New Mountain's long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| New Mountain vs. Invesco Advantage MIT | New Mountain vs. Invesco Municipal Trust | New Mountain vs. Invesco California Value | New Mountain vs. Victory Capital Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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