Correlation Between Diageo PLC and Blackstone Loan

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

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

Diversification Opportunities for Diageo PLC and Blackstone Loan

-0.42

Correlation Coefficient

Diageo PLC  Blackstone Loan

Very good diversification

The 3 months correlation between Diageo and Blackstone is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC and Blackstone Loan Financing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Loan Financing and Diageo PLC 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 Diageo PLC are associated (or correlated) with Blackstone Loan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Loan Financing has no effect on the direction of Diageo PLC i.e., Diageo PLC and Blackstone Loan go up and down completely randomly.

Pair Corralation between Diageo PLC and Blackstone Loan

If you would invest  243,300  in Diageo PLC on October 9, 2024 and sell it today you would earn a total of  7,050  from holding Diageo PLC or generate 2.9% return on investment over 90 days.

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

Diageo PLC  vs.  Blackstone Loan Financing

Diageo PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackstone Loan Financing

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Loan Financing are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Blackstone Loan may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Diageo PLC and Blackstone Loan

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

The idea behind Diageo PLC and Blackstone Loan Financing 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.