Correlation Between BlackRock Credit and Blackstone

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

By analyzing existing cross correlation between BlackRock Credit Allocation and Blackstone Group, you can compare the effects of market volatilities on BlackRock Credit 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 BlackRock Credit with a short position of Blackstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Credit and Blackstone.

Diversification Opportunities for BlackRock Credit and Blackstone

0.35

Correlation Coefficient

BlackRock Credit  Blackstone

Weak diversification

The 3 months correlation between BlackRock and Blackstone is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Credit Allocation and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and BlackRock 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 BlackRock Credit Allocation 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 BlackRock Credit i.e., BlackRock Credit and Blackstone go up and down completely randomly.

Pair Corralation between BlackRock Credit and Blackstone

Considering the 90-day investment horizon BlackRock Credit is expected to generate 4.35 times less return on investment than Blackstone. But when comparing it to its historical volatility, BlackRock Credit Allocation is 2.66 times less risky than Blackstone. It trades about 0.05 of its potential returns per unit of risk. Blackstone Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,665  in Blackstone Group on January 26, 2024 and sell it today you would earn a total of  3,713  from holding Blackstone Group or generate 42.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

BlackRock Credit Allocation  vs.  Blackstone Group

BlackRock Credit All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Credit Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, BlackRock Credit is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Blackstone Group

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Blackstone Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with BlackRock Credit and Blackstone

The main advantage of trading using opposite BlackRock Credit and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Credit 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 BlackRock Credit Allocation 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.