Correlation Between Investor and Blackstone

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

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

Diversification Opportunities for Investor and Blackstone

-0.55

Correlation Coefficient

Investor  Blackstone

Excellent diversification

The 3 months correlation between Investor and Blackstone is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Investor AB and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Investor 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 Investor AB are associated (or correlated) with Blackstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Group has no effect on the direction of Investor i.e., Investor and Blackstone go up and down completely randomly.

Pair Corralation between Investor and Blackstone

Assuming the 90 days horizon Investor AB is expected to under-perform the Blackstone. But the pink sheet apears to be less risky and, when comparing its historical volatility, Investor AB is 2.38 times less risky than Blackstone. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Blackstone Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  16,763  in Blackstone Group on October 22, 2024 and sell it today you would earn a total of  1,232  from holding Blackstone Group or generate 7.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Investor AB  vs.  Blackstone Group

Investor AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Investor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackstone Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Blackstone may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Investor and Blackstone

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

The idea behind Investor AB and Blackstone Group 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 Commodity Directory module to find actively traded commodities issued by global exchanges.