Correlation Between BlackRock TCP and Carlyle Secured

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

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

Diversification Opportunities for BlackRock TCP and Carlyle Secured

0.71

Correlation Coefficient

BlackRock TCP  Carlyle Secured

Poor diversification

The 3 months correlation between BlackRock and Carlyle is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital and Carlyle Secured Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Secured Lending and BlackRock TCP 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 BlackRock TCP Capital are associated (or correlated) with Carlyle Secured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Secured Lending has no effect on the direction of BlackRock TCP i.e., BlackRock TCP and Carlyle Secured go up and down completely randomly.

Pair Corralation between BlackRock TCP and Carlyle Secured

Given the investment horizon of 90 days BlackRock TCP Capital is expected to generate 1.5 times more return on investment than Carlyle Secured. However, BlackRock TCP is 1.5 times more volatile than Carlyle Secured Lending. It trades about -0.03 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about -0.07 per unit of risk. If you would invest  833.00  in BlackRock TCP Capital on December 30, 2024 and sell it today you would lose (34.00) from holding BlackRock TCP Capital or give up 4.08% of portfolio value over 90 days.

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

BlackRock TCP Capital  vs.  Carlyle Secured Lending

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.

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Secured Lending has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock TCP and Carlyle Secured

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

The idea behind BlackRock TCP Capital and Carlyle 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.