Correlation Between BlackRock and Blackstone

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

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

Diversification Opportunities for BlackRock and Blackstone

0.88

Correlation Coefficient

BlackRock  Blackstone

Very poor diversification

The 3 months correlation between BlackRock and Blackstone is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and BlackRock 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 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 BlackRock i.e., BlackRock and Blackstone go up and down completely randomly.

Pair Corralation between BlackRock and Blackstone

Assuming the 90 days trading horizon BlackRock is expected to generate 1.06 times less return on investment than Blackstone. But when comparing it to its historical volatility, BlackRock is 1.56 times less risky than Blackstone. It trades about 0.11 of its potential returns per unit of risk. Blackstone Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,774  in Blackstone Group on September 24, 2024 and sell it today you would earn a total of  4,486  from holding Blackstone Group or generate 38.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.47%
Values	Daily Returns

BlackRock  vs.  Blackstone Group

BlackRock

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, BlackRock reported solid returns over the last few months and may actually be approaching a breakup point.

Blackstone Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackstone Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blackstone reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and Blackstone

The main advantage of trading using opposite BlackRock and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock 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 BlackRock 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..