Correlation Between Industrial Select and Blackstone
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Industrial Select Sector vs. Blackstone Group
Performance |
Timeline |
Industrial Select Sector |
Blackstone Group |
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.Industrial Select vs. First Trust Exchange Traded | Industrial Select vs. Horizon Kinetics Medical | Industrial Select vs. Harbor Health Care | Industrial Select vs. First Trust Indxx |
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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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