Correlation Between Portman Ridge and Nuveen California

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

By analyzing existing cross correlation between Portman Ridge Finance and Nuveen California Select, you can compare the effects of market volatilities on Portman Ridge and Nuveen California 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 Portman Ridge with a short position of Nuveen California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Portman Ridge and Nuveen California.

Diversification Opportunities for Portman Ridge and Nuveen California

0.4

Correlation Coefficient

Portman Ridge  Nuveen California

Very weak diversification

The 3 months correlation between Portman and Nuveen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Portman Ridge Finance and Nuveen California Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California Select and Portman Ridge 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 Portman Ridge Finance are associated (or correlated) with Nuveen California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California Select has no effect on the direction of Portman Ridge i.e., Portman Ridge and Nuveen California go up and down completely randomly.

Pair Corralation between Portman Ridge and Nuveen California

Given the investment horizon of 90 days Portman Ridge Finance is expected to generate 2.59 times more return on investment than Nuveen California. However, Portman Ridge is 2.59 times more volatile than Nuveen California Select. It trades about 0.06 of its potential returns per unit of risk. Nuveen California Select is currently generating about 0.01 per unit of risk. If you would invest  1,172  in Portman Ridge Finance on May 6, 2025 and sell it today you would earn a total of  56.00  from holding Portman Ridge Finance or generate 4.78% return on investment over 90 days.

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

Portman Ridge Finance  vs.  Nuveen California Select

Portman Ridge Finance

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Portman Ridge Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Portman Ridge is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nuveen California Select

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Portman Ridge and Nuveen California

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

The idea behind Portman Ridge Finance and Nuveen California Select 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.