Correlation Between Carlyle and BlackRock

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

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

Diversification Opportunities for Carlyle and BlackRock

0.76

Correlation Coefficient

Carlyle  BlackRock

Poor diversification

The 3 months correlation between Carlyle and BlackRock is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Carlyle 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 Carlyle Group are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Carlyle i.e., Carlyle and BlackRock go up and down completely randomly.

Pair Corralation between Carlyle and BlackRock

Allowing for the 90-day total investment horizon Carlyle Group is expected to under-perform the BlackRock. In addition to that, Carlyle is 1.57 times more volatile than BlackRock. It trades about -0.05 of its total potential returns per unit of risk. BlackRock is currently generating about -0.04 per unit of volatility. If you would invest  102,185  in BlackRock on December 29, 2024 and sell it today you would lose (5,391) from holding BlackRock or give up 5.28% of portfolio value over 90 days.

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

Carlyle Group  vs.  BlackRock

Carlyle Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BlackRock

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Carlyle and BlackRock

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

The idea behind Carlyle Group and BlackRock 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .