Correlation Between Blackstone Mortgage and GREAT AJAX

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

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

Diversification Opportunities for Blackstone Mortgage and GREAT AJAX

0.14

Correlation Coefficient

Blackstone Mortgage  GREAT AJAX

Average diversification

The 3 months correlation between Blackstone and GREAT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Mortgage Trust and GREAT AJAX P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREAT AJAX P and Blackstone Mortgage 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 Blackstone Mortgage Trust are associated (or correlated) with GREAT AJAX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREAT AJAX P has no effect on the direction of Blackstone Mortgage i.e., Blackstone Mortgage and GREAT AJAX go up and down completely randomly.

Pair Corralation between Blackstone Mortgage and GREAT AJAX

Assuming the 90 days trading horizon Blackstone Mortgage Trust is expected to generate 0.9 times more return on investment than GREAT AJAX. However, Blackstone Mortgage Trust is 1.11 times less risky than GREAT AJAX. It trades about -0.02 of its potential returns per unit of risk. GREAT AJAX P is currently generating about -0.04 per unit of risk. If you would invest  1,760  in Blackstone Mortgage Trust on October 11, 2024 and sell it today you would lose (19.00) from holding Blackstone Mortgage Trust or give up 1.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Blackstone Mortgage Trust  vs.  GREAT AJAX P

Blackstone Mortgage Trust

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Mortgage Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackstone Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.

GREAT AJAX P

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in GREAT AJAX P are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GREAT AJAX may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Blackstone Mortgage and GREAT AJAX

The main advantage of trading using opposite Blackstone Mortgage and GREAT AJAX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackstone Mortgage position performs unexpectedly, GREAT AJAX 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 GREAT AJAX will offset losses from the drop in GREAT AJAX's long position.

The idea behind Blackstone Mortgage Trust and GREAT AJAX P 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.