Correlation Between BlackRock TCP and Investor

Can any of the company-specific risk be diversified away by investing in both BlackRock TCP and Investor 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 Investor 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 Investor AB ser, you can compare the effects of market volatilities on BlackRock TCP and Investor 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 Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock TCP and Investor.

Diversification Opportunities for BlackRock TCP and Investor

-0.67

Correlation Coefficient

BlackRock TCP  Investor

Excellent diversification

The 3 months correlation between BlackRock and Investor is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital and Investor AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investor AB ser 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 Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investor AB ser has no effect on the direction of BlackRock TCP i.e., BlackRock TCP and Investor go up and down completely randomly.

Pair Corralation between BlackRock TCP and Investor

Given the investment horizon of 90 days BlackRock TCP Capital is expected to under-perform the Investor. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock TCP Capital is 1.2 times less risky than Investor. The stock trades about -0.08 of its potential returns per unit of risk. The Investor AB ser is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,661  in Investor AB ser on October 3, 2024 and sell it today you would lose (28.00) from holding Investor AB ser or give up 1.05% of portfolio value over 90 days.

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

BlackRock TCP Capital  vs.  Investor AB ser

BlackRock TCP Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 8 (%) 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 February 2025.

Investor AB ser

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Investor AB ser has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BlackRock TCP and Investor

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

The idea behind BlackRock TCP Capital and Investor AB ser 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 Valuation module to check real value of public entities based on technical and fundamental data.