Correlation Between Davis Financial and Blackstone Secured

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

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

Diversification Opportunities for Davis Financial and Blackstone Secured

0.26

Correlation Coefficient

Davis Financial  Blackstone Secured

Modest diversification

The 3 months correlation between Davis and Blackstone is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Davis Financial Fund and Blackstone Secured Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Secured and Davis Financial 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 Davis Financial Fund are associated (or correlated) with Blackstone Secured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackstone Secured has no effect on the direction of Davis Financial i.e., Davis Financial and Blackstone Secured go up and down completely randomly.

Pair Corralation between Davis Financial and Blackstone Secured

Assuming the 90 days horizon Davis Financial Fund is expected to under-perform the Blackstone Secured. In addition to that, Davis Financial is 1.54 times more volatile than Blackstone Secured Lending. It trades about -0.28 of its total potential returns per unit of risk. Blackstone Secured Lending is currently generating about 0.21 per unit of volatility. If you would invest  3,106  in Blackstone Secured Lending on October 5, 2024 and sell it today you would earn a total of  113.00  from holding Blackstone Secured Lending or generate 3.64% return on investment over 90 days.

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

Davis Financial Fund  vs.  Blackstone Secured Lending

Davis Financial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Davis Financial Fund are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Davis Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackstone Secured

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Secured Lending are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. Despite quite unsteady basic indicators, Blackstone Secured may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Davis Financial and Blackstone Secured

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

The idea behind Davis Financial Fund and Blackstone Secured Lending 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.