Correlation Between BlackRock TCP and New Mountain

Can any of the company-specific risk be diversified away by investing in both BlackRock TCP 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 BlackRock TCP and New Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock TCP Capital and New Mountain Finance, you can compare the effects of market volatilities on BlackRock TCP 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 BlackRock TCP with a short position of New Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock TCP and New Mountain.

Diversification Opportunities for BlackRock TCP and New Mountain

0.28

Correlation Coefficient

BlackRock TCP  New Mountain

Modest diversification

The 3 months correlation between BlackRock and New is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital 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 BlackRock TCP 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 BlackRock TCP Capital 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 BlackRock TCP i.e., BlackRock TCP and New Mountain go up and down completely randomly.

Pair Corralation between BlackRock TCP and New Mountain

Given the investment horizon of 90 days BlackRock TCP Capital is expected to generate 1.87 times more return on investment than New Mountain. However, BlackRock TCP is 1.87 times more volatile than New Mountain Finance. It trades about 0.08 of its potential returns per unit of risk. New Mountain Finance is currently generating about 0.0 per unit of risk. If you would invest  872.00  in BlackRock TCP Capital on September 1, 2024 and sell it today you would earn a total of  69.00  from holding BlackRock TCP Capital or generate 7.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

BlackRock TCP Capital  vs.  New Mountain Finance

BlackRock TCP Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BlackRock TCP may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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.

Pair Trading with BlackRock TCP and New Mountain

The main advantage of trading using opposite BlackRock TCP and New Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock TCP 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.

The idea behind BlackRock TCP Capital and New Mountain Finance 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..