Correlation Between Blackstone and Royce Value

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

By analyzing existing cross correlation between Blackstone Group and Royce Value Closed, you can compare the effects of market volatilities on Blackstone and Royce Value 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 Royce Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone and Royce Value.

Diversification Opportunities for Blackstone and Royce Value

0.92

Correlation Coefficient

Blackstone  Royce Value

Almost no diversification

The 3 months correlation between Blackstone and Royce is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Group and Royce Value Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royce Value Closed 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 Royce Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royce Value Closed has no effect on the direction of Blackstone i.e., Blackstone and Royce Value go up and down completely randomly.

Pair Corralation between Blackstone and Royce Value

Allowing for the 90-day total investment horizon Blackstone Group is expected to under-perform the Royce Value. In addition to that, Blackstone is 2.17 times more volatile than Royce Value Closed. It trades about -0.12 of its total potential returns per unit of risk. Royce Value Closed is currently generating about -0.09 per unit of volatility. If you would invest  1,539  in Royce Value Closed on December 29, 2024 and sell it today you would lose (90.00) from holding Royce Value Closed or give up 5.85% of portfolio value over 90 days.

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

Blackstone Group  vs.  Royce Value Closed

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.

Royce Value Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Royce Value Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Royce Value is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Blackstone and Royce Value

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

The idea behind Blackstone Group and Royce Value Closed 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.