Correlation Between Urbana and Blackstone

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

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

Diversification Opportunities for Urbana and Blackstone

-0.47

Correlation Coefficient

Urbana  Blackstone

Very good diversification

The 3 months correlation between Urbana and Blackstone is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Urbana and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Urbana 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 Urbana 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 Urbana i.e., Urbana and Blackstone go up and down completely randomly.

Pair Corralation between Urbana and Blackstone

Assuming the 90 days horizon Urbana is expected to under-perform the Blackstone. But the pink sheet apears to be less risky and, when comparing its historical volatility, Urbana is 1.08 times less risky than Blackstone. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Blackstone Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  14,036  in Blackstone Group on June 20, 2024 and sell it today you would earn a total of  1,457  from holding Blackstone Group or generate 10.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Urbana  vs.  Blackstone Group

Urbana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Urbana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Urbana is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackstone Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blackstone showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Urbana and Blackstone

The main advantage of trading using opposite Urbana and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Urbana 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 Urbana 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.