Correlation Between Brightsphere Investment and BlackRock TCP

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

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

Diversification Opportunities for Brightsphere Investment and BlackRock TCP

0.81

Correlation Coefficient

Brightsphere Investment  BlackRock TCP

Very poor diversification

The 3 months correlation between Brightsphere and BlackRock is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Brightsphere Investment Group and BlackRock TCP Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock TCP Capital and Brightsphere Investment 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 Brightsphere Investment Group are associated (or correlated) with BlackRock TCP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock TCP Capital has no effect on the direction of Brightsphere Investment i.e., Brightsphere Investment and BlackRock TCP go up and down completely randomly.

Pair Corralation between Brightsphere Investment and BlackRock TCP

Given the investment horizon of 90 days Brightsphere Investment is expected to generate 3.22 times less return on investment than BlackRock TCP. But when comparing it to its historical volatility, Brightsphere Investment Group is 1.17 times less risky than BlackRock TCP. It trades about 0.1 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  896.00  in BlackRock TCP Capital on September 16, 2024 and sell it today you would earn a total of  55.00  from holding BlackRock TCP Capital or generate 6.14% return on investment over 90 days.

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

Brightsphere Investment Group  vs.  BlackRock TCP Capital

Brightsphere Investment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brightsphere Investment Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, Brightsphere Investment reported solid returns over the last few months and may actually be approaching a breakup point.

BlackRock TCP Capital

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, BlackRock TCP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brightsphere Investment and BlackRock TCP

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

The idea behind Brightsphere Investment Group and BlackRock TCP Capital 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.