Correlation Between Investcorp Credit and T Rowe

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

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

Diversification Opportunities for Investcorp Credit and T Rowe

0.02

Correlation Coefficient

Investcorp Credit  T Rowe

Significant diversification

The 3 months correlation between Investcorp and RRTLX is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Investcorp Credit Management and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price and Investcorp Credit 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 Investcorp Credit Management are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Investcorp Credit i.e., Investcorp Credit and T Rowe go up and down completely randomly.

Pair Corralation between Investcorp Credit and T Rowe

Given the investment horizon of 90 days Investcorp Credit Management is expected to under-perform the T Rowe. In addition to that, Investcorp Credit is 4.54 times more volatile than T Rowe Price. It trades about -0.1 of its total potential returns per unit of risk. T Rowe Price is currently generating about 0.03 per unit of volatility. If you would invest  1,256  in T Rowe Price on August 10, 2024 and sell it today you would earn a total of  2.00  from holding T Rowe Price or generate 0.16% return on investment over 90 days.

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

Investcorp Credit Management  vs.  T Rowe Price

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 newest stock price disturbance, may contribute to short-term losses for the investors.

T Rowe Price

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, T Rowe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investcorp Credit and T Rowe

The main advantage of trading using opposite Investcorp Credit and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investcorp Credit position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Investcorp Credit Management and T Rowe Price 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.