Correlation Between Blackstone Secured and Small Cap

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

Diversification Opportunities for Blackstone Secured and Small Cap

-0.11

Correlation Coefficient

Blackstone Secured  Small Cap

Good diversification

The 3 months correlation between Blackstone and Small is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Secured Lending and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Blackstone Secured i.e., Blackstone Secured and Small Cap go up and down completely randomly.

Pair Corralation between Blackstone Secured and Small Cap

Given the investment horizon of 90 days Blackstone Secured Lending is expected to generate 1.05 times more return on investment than Small Cap. However, Blackstone Secured is 1.05 times more volatile than Small Cap Stock. It trades about 0.06 of its potential returns per unit of risk. Small Cap Stock is currently generating about -0.13 per unit of risk. If you would invest  3,173  in Blackstone Secured Lending on December 21, 2024 and sell it today you would earn a total of  127.00  from holding Blackstone Secured Lending or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Blackstone Secured Lending  vs.  Small Cap Stock

Blackstone Secured

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Secured Lending are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Blackstone Secured is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Small Cap Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Cap Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Blackstone Secured and Small Cap

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

The idea behind Blackstone Secured Lending and Small Cap Stock 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.