Correlation Between DAX Index and Blackstone Mortgage

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

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

Diversification Opportunities for DAX Index and Blackstone Mortgage

0.58

Correlation Coefficient

DAX Index  Blackstone Mortgage

Very weak diversification

The 3 months correlation between DAX and Blackstone is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and Blackstone Mortgage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Mortgage Trust and DAX Index 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 DAX Index are associated (or correlated) with Blackstone Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Mortgage Trust has no effect on the direction of DAX Index i.e., DAX Index and Blackstone Mortgage go up and down completely randomly.

Pair Corralation between DAX Index and Blackstone Mortgage

Assuming the 90 days trading horizon DAX Index is expected to generate 0.31 times more return on investment than Blackstone Mortgage. However, DAX Index is 3.19 times less risky than Blackstone Mortgage. It trades about 0.0 of its potential returns per unit of risk. Blackstone Mortgage Trust is currently generating about -0.02 per unit of risk. If you would invest  2,032,916  in DAX Index on October 11, 2024 and sell it today you would earn a total of  78.00  from holding DAX Index or generate 0.0% return on investment over 90 days.

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

DAX Index  vs.  Blackstone Mortgage Trust

Pair Trading with DAX Index and Blackstone Mortgage

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

The idea behind DAX Index and Blackstone Mortgage Trust 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.