Correlation Between Blackstone Loan and Aberforth Smaller

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

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

Diversification Opportunities for Blackstone Loan and Aberforth Smaller

-0.18

Correlation Coefficient

Blackstone Loan  Aberforth Smaller

Good diversification

The 3 months correlation between Blackstone and Aberforth is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Loan Financing and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller and Blackstone Loan 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 Loan Financing are associated (or correlated) with Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of Blackstone Loan i.e., Blackstone Loan and Aberforth Smaller go up and down completely randomly.

Pair Corralation between Blackstone Loan and Aberforth Smaller

Assuming the 90 days trading horizon Blackstone Loan Financing is expected to generate 1.25 times more return on investment than Aberforth Smaller. However, Blackstone Loan is 1.25 times more volatile than Aberforth Smaller Companies. It trades about 0.17 of its potential returns per unit of risk. Aberforth Smaller Companies is currently generating about -0.1 per unit of risk. If you would invest  5,698  in Blackstone Loan Financing on October 26, 2024 and sell it today you would earn a total of  702.00  from holding Blackstone Loan Financing or generate 12.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

Blackstone Loan Financing  vs.  Aberforth Smaller Companies

Blackstone Loan Financing

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Blackstone Loan Financing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Blackstone Loan unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aberforth Smaller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aberforth Smaller Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aberforth Smaller is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackstone Loan and Aberforth Smaller

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

The idea behind Blackstone Loan Financing and Aberforth Smaller Companies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.