Correlation Between VMware and Blackstone
Can any of the company-specific risk be diversified away by investing in both VMware and Blackstone 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 VMware and Blackstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VMware Inc and Blackstone Group, you can compare the effects of market volatilities on VMware and Blackstone 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 VMware with a short position of Blackstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of VMware and Blackstone.
Diversification Opportunities for VMware and Blackstone
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VMware and Blackstone is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding VMware Inc and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and VMware 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 VMware Inc are associated (or correlated) with Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of VMware i.e., VMware and Blackstone go up and down completely randomly.
Pair Corralation between VMware and Blackstone
Considering the 90-day investment horizon VMware Inc is expected to under-perform the Blackstone. But the stock apears to be less risky and, when comparing its historical volatility, VMware Inc is 1.16 times less risky than Blackstone. The stock trades about -0.22 of its potential returns per unit of risk. The Blackstone Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,124 in Blackstone Group on January 19, 2024 and sell it today you would earn a total of 2,908 from holding Blackstone Group or generate 31.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.7% |
| Values | Daily Returns |
VMware Inc vs. Blackstone Group
Performance |
| Timeline |
| VMware Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Blackstone Group |
VMware and Blackstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VMware and Blackstone
The main advantage of trading using opposite VMware and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VMware position performs unexpectedly, Blackstone 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 Blackstone will offset losses from the drop in Blackstone's long position.The idea behind VMware Inc and Blackstone Group 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.| Blackstone vs. T Rowe Price | Blackstone vs. State Street Corp | Blackstone vs. KKR Co LP | Blackstone vs. Brookfield Asset Management |
Check out your portfolio center.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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