Correlation Between Bain Capital and BlackRock Capital

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

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

Diversification Opportunities for Bain Capital and BlackRock Capital

0.6

Correlation Coefficient

Bain Capital  BlackRock Capital

Poor diversification

The 3 months correlation between Bain and BlackRock is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bain Capital Specialty and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital and Bain Capital 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 Bain Capital Specialty are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of Bain Capital i.e., Bain Capital and BlackRock Capital go up and down completely randomly.

Pair Corralation between Bain Capital and BlackRock Capital

Given the investment horizon of 90 days Bain Capital is expected to generate 1.51 times less return on investment than BlackRock Capital. In addition to that, Bain Capital is 1.42 times more volatile than BlackRock Capital Allocation. It trades about 0.06 of its total potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.13 per unit of volatility. If you would invest  1,539  in BlackRock Capital Allocation on August 28, 2024 and sell it today you would earn a total of  80.00  from holding BlackRock Capital Allocation or generate 5.2% return on investment over 90 days.

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

Bain Capital Specialty  vs.  BlackRock Capital Allocation

Bain Capital Specialty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bain Capital Specialty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Bain Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bain Capital and BlackRock Capital

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

The idea behind Bain Capital Specialty and BlackRock Capital Allocation 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.