Correlation Between Blackstone and Embrace Change

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

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

Diversification Opportunities for Blackstone and Embrace Change

0.14

Correlation Coefficient

Blackstone  Embrace Change

Average diversification

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

Pair Corralation between Blackstone and Embrace Change

Allowing for the 90-day total investment horizon Blackstone Group is expected to under-perform the Embrace Change. But the stock apears to be less risky and, when comparing its historical volatility, Blackstone Group is 7.7 times less risky than Embrace Change. The stock trades about -0.12 of its potential returns per unit of risk. The Embrace Change Acquisition is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  8.52  in Embrace Change Acquisition on December 29, 2024 and sell it today you would earn a total of  9.48  from holding Embrace Change Acquisition or generate 111.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.85%
Values	Daily Returns

Blackstone Group  vs.  Embrace Change Acquisition

Blackstone Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackstone Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Embrace Change Acqui

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Embrace Change reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackstone and Embrace Change

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

The idea behind Blackstone Group and Embrace Change Acquisition 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.