Correlation Between P10 and BlackRock TCP

Can any of the company-specific risk be diversified away by investing in both P10 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 P10 and BlackRock TCP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P10 Inc and BlackRock TCP Capital, you can compare the effects of market volatilities on P10 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 P10 with a short position of BlackRock TCP. Check out your portfolio center. Please also check ongoing floating volatility patterns of P10 and BlackRock TCP.

Diversification Opportunities for P10 and BlackRock TCP

0.87

Correlation Coefficient

P10  BlackRock TCP

Very poor diversification

The 3 months correlation between P10 and BlackRock is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding P10 Inc 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 P10 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 P10 Inc 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 P10 i.e., P10 and BlackRock TCP go up and down completely randomly.

Pair Corralation between P10 and BlackRock TCP

Allowing for the 90-day total investment horizon P10 Inc is expected to generate 1.02 times more return on investment than BlackRock TCP. However, P10 is 1.02 times more volatile than BlackRock TCP Capital. It trades about 0.21 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about 0.09 per unit of risk. If you would invest  1,051  in P10 Inc on September 15, 2024 and sell it today you would earn a total of  274.00  from holding P10 Inc or generate 26.07% return on investment over 90 days.

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

P10 Inc  vs.  BlackRock TCP Capital

P10 Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in P10 Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, P10 showed solid returns over the last few months and may actually be approaching a breakup point.

BlackRock TCP Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BlackRock TCP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with P10 and BlackRock TCP

The main advantage of trading using opposite P10 and BlackRock TCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P10 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 P10 Inc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.