Correlation Between Safehold and Investcorp Credit

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

By analyzing existing cross correlation between Safehold and Investcorp Credit Management, you can compare the effects of market volatilities on Safehold and Investcorp Credit 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 Safehold with a short position of Investcorp Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safehold and Investcorp Credit.

Diversification Opportunities for Safehold and Investcorp Credit

0.16

Correlation Coefficient

Safehold  Investcorp Credit

Average diversification

The 3 months correlation between Safehold and Investcorp is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Investcorp Credit Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investcorp Credit and Safehold 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 Safehold are associated (or correlated) with Investcorp Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investcorp Credit has no effect on the direction of Safehold i.e., Safehold and Investcorp Credit go up and down completely randomly.

Pair Corralation between Safehold and Investcorp Credit

Given the investment horizon of 90 days Safehold is expected to under-perform the Investcorp Credit. In addition to that, Safehold is 2.05 times more volatile than Investcorp Credit Management. It trades about -0.04 of its total potential returns per unit of risk. Investcorp Credit Management is currently generating about 0.02 per unit of volatility. If you would invest  326.00  in Investcorp Credit Management on February 4, 2024 and sell it today you would earn a total of  1.00  from holding Investcorp Credit Management or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Safehold  vs.  Investcorp Credit Management

Safehold

Risk-Adjusted Performance

0 of 100

Very Weak

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

Investcorp Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investcorp Credit Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Investcorp Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Safehold and Investcorp Credit

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

The idea behind Safehold and Investcorp Credit Management 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.