Correlation Between BlackRock TCP and WhiteHorse Finance

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

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

Diversification Opportunities for BlackRock TCP and WhiteHorse Finance

0.57

Correlation Coefficient

BlackRock TCP  WhiteHorse Finance

Very weak diversification

The 3 months correlation between BlackRock and WhiteHorse is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital and WhiteHorse Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WhiteHorse Finance and BlackRock TCP 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 TCP Capital are associated (or correlated) with WhiteHorse Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WhiteHorse Finance has no effect on the direction of BlackRock TCP i.e., BlackRock TCP and WhiteHorse Finance go up and down completely randomly.

Pair Corralation between BlackRock TCP and WhiteHorse Finance

Given the investment horizon of 90 days BlackRock TCP Capital is expected to generate 0.45 times more return on investment than WhiteHorse Finance. However, BlackRock TCP Capital is 2.23 times less risky than WhiteHorse Finance. It trades about 0.57 of its potential returns per unit of risk. WhiteHorse Finance is currently generating about 0.04 per unit of risk. If you would invest  1,045  in BlackRock TCP Capital on March 5, 2024 and sell it today you would earn a total of  63.00  from holding BlackRock TCP Capital or generate 6.03% return on investment over 90 days.

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

BlackRock TCP Capital  vs.  WhiteHorse Finance

BlackRock TCP Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, BlackRock TCP may actually be approaching a critical reversion point that can send shares even higher in July 2024.

WhiteHorse Finance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WhiteHorse Finance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, WhiteHorse Finance is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BlackRock TCP and WhiteHorse Finance

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

The idea behind BlackRock TCP Capital and WhiteHorse Finance 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.