Correlation Between Newtek Business and Blackstone

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

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

Diversification Opportunities for Newtek Business and Blackstone

0.89

Correlation Coefficient

Newtek Business  Blackstone

Very poor diversification

The 3 months correlation between Newtek and Blackstone is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Newtek Business Services and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Newtek Business 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 Newtek Business Services 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 Newtek Business i.e., Newtek Business and Blackstone go up and down completely randomly.

Pair Corralation between Newtek Business and Blackstone

Assuming the 90 days trading horizon Newtek Business Services is expected to under-perform the Blackstone. But the stock apears to be less risky and, when comparing its historical volatility, Newtek Business Services is 1.36 times less risky than Blackstone. The stock trades about -0.45 of its potential returns per unit of risk. The Blackstone Group is currently generating about -0.25 of returns per unit of risk over similar time horizon. If you would invest  18,280  in Blackstone Group on September 27, 2024 and sell it today you would lose (1,786) from holding Blackstone Group or give up 9.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Newtek Business Services  vs.  Blackstone Group

Newtek Business Services

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newtek Business Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtek Business reported solid returns over the last few months and may actually be approaching a breakup point.

Blackstone Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackstone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newtek Business and Blackstone

The main advantage of trading using opposite Newtek Business and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newtek Business 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 Newtek Business Services 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.