Correlation Between New Mountain and Phenixfin

Can any of the company-specific risk be diversified away by investing in both New Mountain and Phenixfin 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 Phenixfin 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 Phenixfin, you can compare the effects of market volatilities on New Mountain and Phenixfin 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 Phenixfin. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Phenixfin.

Diversification Opportunities for New Mountain and Phenixfin

-0.13

Correlation Coefficient

New Mountain  Phenixfin

Good diversification

The 3 months correlation between New and Phenixfin is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Phenixfin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phenixfin 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 Phenixfin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phenixfin has no effect on the direction of New Mountain i.e., New Mountain and Phenixfin go up and down completely randomly.

Pair Corralation between New Mountain and Phenixfin

Given the investment horizon of 90 days New Mountain Finance is expected to under-perform the Phenixfin. But the stock apears to be less risky and, when comparing its historical volatility, New Mountain Finance is 1.51 times less risky than Phenixfin. The stock trades about -0.01 of its potential returns per unit of risk. The Phenixfin is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,700  in Phenixfin on September 3, 2024 and sell it today you would earn a total of  25.00  from holding Phenixfin or generate 0.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

New Mountain Finance  vs.  Phenixfin

New Mountain Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Mountain Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, New Mountain is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Phenixfin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Phenixfin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Phenixfin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with New Mountain and Phenixfin

The main advantage of trading using opposite New Mountain and Phenixfin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Mountain position performs unexpectedly, Phenixfin 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 Phenixfin will offset losses from the drop in Phenixfin's long position.

The idea behind New Mountain Finance and Phenixfin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.