Correlation Between Carlyle Secured and BlackRock TCP

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

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

Diversification Opportunities for Carlyle Secured and BlackRock TCP

0.71

Correlation Coefficient

Carlyle Secured  BlackRock TCP

Poor diversification

The 3 months correlation between Carlyle and BlackRock is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Secured Lending and BlackRock TCP Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock TCP Capital and Carlyle 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 Carlyle Secured Lending are associated (or correlated) with BlackRock TCP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock TCP Capital has no effect on the direction of Carlyle Secured i.e., Carlyle Secured and BlackRock TCP go up and down completely randomly.

Pair Corralation between Carlyle Secured and BlackRock TCP

Given the investment horizon of 90 days Carlyle Secured Lending is expected to under-perform the BlackRock TCP. But the stock apears to be less risky and, when comparing its historical volatility, Carlyle Secured Lending is 1.5 times less risky than BlackRock TCP. The stock trades about -0.07 of its potential returns per unit of risk. The BlackRock TCP Capital is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  833.00  in BlackRock TCP Capital on December 30, 2024 and sell it today you would lose (34.00) from holding BlackRock TCP Capital or give up 4.08% of portfolio value over 90 days.

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

Carlyle Secured Lending  vs.  BlackRock TCP Capital

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Secured Lending has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock TCP Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock TCP Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BlackRock TCP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Carlyle Secured and BlackRock TCP

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

The idea behind Carlyle Secured Lending and BlackRock TCP Capital 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.