Correlation Between Alphabet and Blackstone

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

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

Diversification Opportunities for Alphabet and Blackstone

-0.11

Correlation Coefficient

Alphabet  Blackstone

Good diversification

The 3 months correlation between Alphabet and Blackstone is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and Blackstone Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackstone Group and Alphabet 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 Alphabet Inc Class C 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 Alphabet i.e., Alphabet and Blackstone go up and down completely randomly.

Pair Corralation between Alphabet and Blackstone

Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 1.21 times more return on investment than Blackstone. However, Alphabet is 1.21 times more volatile than Blackstone Group. It trades about 0.25 of its potential returns per unit of risk. Blackstone Group is currently generating about -0.04 per unit of risk. If you would invest  13,978  in Alphabet Inc Class C on January 30, 2024 and sell it today you would earn a total of  3,391  from holding Alphabet Inc Class C or generate 24.26% return on investment over 90 days.

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

Alphabet Inc Class C  vs.  Blackstone Group

Alphabet Class C

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Alphabet and Blackstone

The main advantage of trading using opposite Alphabet and Blackstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet 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 Alphabet Inc Class C 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.