Correlation Between Golub Capital and BlackRock TCP

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

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

Diversification Opportunities for Golub Capital and BlackRock TCP

0.54

Correlation Coefficient

Golub Capital  BlackRock TCP

Very weak diversification

The 3 months correlation between Golub and BlackRock is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Golub Capital BDC 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 Golub Capital 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 Golub Capital BDC 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 Golub Capital i.e., Golub Capital and BlackRock TCP go up and down completely randomly.

Pair Corralation between Golub Capital and BlackRock TCP

Given the investment horizon of 90 days Golub Capital BDC is expected to generate 0.46 times more return on investment than BlackRock TCP. However, Golub Capital BDC is 2.17 times less risky than BlackRock TCP. It trades about 0.07 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about -0.03 per unit of risk. If you would invest  1,474  in Golub Capital BDC on December 29, 2024 and sell it today you would earn a total of  51.00  from holding Golub Capital BDC or generate 3.46% return on investment over 90 days.

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

Golub Capital BDC  vs.  BlackRock TCP Capital

Golub Capital BDC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golub Capital BDC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Golub Capital is not utilizing all of its potentials. The latest 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 Golub Capital and BlackRock TCP

The main advantage of trading using opposite Golub Capital and BlackRock TCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golub Capital 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 Golub Capital BDC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.