Correlation Between Industrial Select and Blackstone

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Can any of the company-specific risk be diversified away by investing in both Industrial Select 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 Industrial Select and Blackstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Select Sector and Blackstone Group, you can compare the effects of market volatilities on Industrial Select 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 Industrial Select with a short position of Blackstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Select and Blackstone.

Diversification Opportunities for Industrial Select and Blackstone

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Industrial and Blackstone is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Select Sector and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Industrial Select 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 Industrial Select Sector 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 Industrial Select i.e., Industrial Select and Blackstone go up and down completely randomly.

Pair Corralation between Industrial Select and Blackstone

Considering the 90-day investment horizon Industrial Select Sector is expected to generate 0.4 times more return on investment than Blackstone. However, Industrial Select Sector is 2.48 times less risky than Blackstone. It trades about 0.36 of its potential returns per unit of risk. Blackstone Group is currently generating about 0.1 per unit of risk. If you would invest  11,985  in Industrial Select Sector on December 29, 2023 and sell it today you would earn a total of  609.00  from holding Industrial Select Sector or generate 5.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Industrial Select Sector  vs.  Blackstone Group

 Performance 
       Timeline  
Industrial Select Sector 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Select Sector are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal essential indicators, Industrial Select may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Blackstone Group 

Risk-Adjusted Performance

1 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Blackstone is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Industrial Select and Blackstone Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Industrial Select and Blackstone

The main advantage of trading using opposite Industrial Select and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Select 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 Industrial Select Sector 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.
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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