Correlation Between Blackstone Loan and Monks Investment

Can any of the company-specific risk be diversified away by investing in both Blackstone Loan and Monks Investment 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 Monks Investment 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 Monks Investment Trust, you can compare the effects of market volatilities on Blackstone Loan and Monks Investment 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 Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone Loan and Monks Investment.

Diversification Opportunities for Blackstone Loan and Monks Investment

0.95

Correlation Coefficient

Blackstone Loan  Monks Investment

Almost no diversification

The 3 months correlation between Blackstone and Monks is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Loan Financing and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust 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 Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Blackstone Loan i.e., Blackstone Loan and Monks Investment go up and down completely randomly.

Pair Corralation between Blackstone Loan and Monks Investment

Assuming the 90 days trading horizon Blackstone Loan Financing is expected to under-perform the Monks Investment. But the stock apears to be less risky and, when comparing its historical volatility, Blackstone Loan Financing is 2.48 times less risky than Monks Investment. The stock trades about -0.22 of its potential returns per unit of risk. The Monks Investment Trust is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  127,000  in Monks Investment Trust on September 30, 2024 and sell it today you would lose (1,600) from holding Monks Investment Trust or give up 1.26% of portfolio value over 90 days.

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

Blackstone Loan Financing  vs.  Monks Investment Trust

Blackstone Loan Financing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Loan Financing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Blackstone Loan may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Monks Investment Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackstone Loan and Monks Investment

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

The idea behind Blackstone Loan Financing and Monks Investment Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.