Correlation Between Embrace Change and Blackstone

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

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

Diversification Opportunities for Embrace Change and Blackstone

-0.68

Correlation Coefficient

Embrace Change  Blackstone

Excellent diversification

The 3 months correlation between Embrace and Blackstone is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Embrace Change 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 Embrace Change Acquisition 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 Embrace Change i.e., Embrace Change and Blackstone go up and down completely randomly.

Pair Corralation between Embrace Change and Blackstone

Assuming the 90 days horizon Embrace Change is expected to generate 1.97 times less return on investment than Blackstone. But when comparing it to its historical volatility, Embrace Change Acquisition is 4.29 times less risky than Blackstone. It trades about 0.07 of its potential returns per unit of risk. Blackstone Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  9,640  in Blackstone Group on February 7, 2024 and sell it today you would earn a total of  2,481  from holding Blackstone Group or generate 25.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.08%
Values	Daily Returns

Embrace Change Acquisition  vs.  Blackstone Group

Embrace Change Acqui

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Blackstone Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackstone Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Blackstone is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Embrace Change and Blackstone

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