Correlation Between T Rowe and Blackstone

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

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

Diversification Opportunities for T Rowe and Blackstone

0.51

Correlation Coefficient

T Rowe  Blackstone

Very weak diversification

The 3 months correlation between TROW and Blackstone is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding T Rowe Price and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and T Rowe 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 T Rowe Price 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 T Rowe i.e., T Rowe and Blackstone go up and down completely randomly.

Pair Corralation between T Rowe and Blackstone

Given the investment horizon of 90 days T Rowe Price is expected to under-perform the Blackstone. But the stock apears to be less risky and, when comparing its historical volatility, T Rowe Price is 1.38 times less risky than Blackstone. The stock trades about -0.25 of its potential returns per unit of risk. The Blackstone Group is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  12,776  in Blackstone Group on January 20, 2024 and sell it today you would lose (744.00) from holding Blackstone Group or give up 5.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

T Rowe Price  vs.  Blackstone Group

T Rowe Price

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days T Rowe Price has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, T Rowe is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Blackstone Group

Risk-Adjusted Performance

0 of 100

Very 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 T Rowe and Blackstone

The main advantage of trading using opposite T Rowe and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if T Rowe 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 T Rowe Price 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.