Correlation Between Blackstone and T Rowe

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

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

Diversification Opportunities for Blackstone and T Rowe

0.4

Correlation Coefficient

Blackstone  T Rowe

Very weak diversification

The 3 months correlation between Blackstone and TROW is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Group and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price and Blackstone 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 Blackstone Group are associated (or correlated) with T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Blackstone i.e., Blackstone and T Rowe go up and down completely randomly.

Pair Corralation between Blackstone and T Rowe

Allowing for the 90-day total investment horizon Blackstone Group is expected to generate 1.19 times more return on investment than T Rowe. However, Blackstone is 1.19 times more volatile than T Rowe Price. It trades about 0.04 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.02 per unit of risk. If you would invest  9,003  in Blackstone Group on January 31, 2024 and sell it today you would earn a total of  3,059  from holding Blackstone Group or generate 33.98% return on investment over 90 days.

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

Blackstone Group  vs.  T Rowe Price

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 current stock price disturbance, may contribute to short-term losses for the investors.

T Rowe Price

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, T Rowe is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Blackstone and T Rowe

The main advantage of trading using opposite Blackstone and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackstone position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Blackstone Group and T Rowe Price 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.