Correlation Between Blackstone Secured and Financials Ultrasector

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

By analyzing existing cross correlation between Blackstone Secured Lending and Financials Ultrasector Profund, you can compare the effects of market volatilities on Blackstone Secured and Financials Ultrasector 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 Secured with a short position of Financials Ultrasector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone Secured and Financials Ultrasector.

Diversification Opportunities for Blackstone Secured and Financials Ultrasector

0.58

Correlation Coefficient

Blackstone Secured  Financials Ultrasector

Very weak diversification

The 3 months correlation between Blackstone and Financials is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Secured Lending and Financials Ultrasector Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financials Ultrasector and Blackstone Secured 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 Secured Lending are associated (or correlated) with Financials Ultrasector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financials Ultrasector has no effect on the direction of Blackstone Secured i.e., Blackstone Secured and Financials Ultrasector go up and down completely randomly.

Pair Corralation between Blackstone Secured and Financials Ultrasector

Given the investment horizon of 90 days Blackstone Secured Lending is expected to generate 0.59 times more return on investment than Financials Ultrasector. However, Blackstone Secured Lending is 1.71 times less risky than Financials Ultrasector. It trades about 0.15 of its potential returns per unit of risk. Financials Ultrasector Profund is currently generating about -0.17 per unit of risk. If you would invest  3,103  in Blackstone Secured Lending on October 9, 2024 and sell it today you would earn a total of  85.00  from holding Blackstone Secured Lending or generate 2.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Blackstone Secured Lending  vs.  Financials Ultrasector Profund

Blackstone Secured

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Secured Lending are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite quite unsteady basic indicators, Blackstone Secured may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Financials Ultrasector

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Financials Ultrasector may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Blackstone Secured and Financials Ultrasector

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

The idea behind Blackstone Secured Lending and Financials Ultrasector Profund 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.