Correlation Between Carlyle and BlackRock Capital

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

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

Diversification Opportunities for Carlyle and BlackRock Capital

0.63

Correlation Coefficient

Carlyle  BlackRock Capital

Poor diversification

The 3 months correlation between Carlyle and BlackRock is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Carlyle Group and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital and Carlyle 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 Carlyle Group are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of Carlyle i.e., Carlyle and BlackRock Capital go up and down completely randomly.

Pair Corralation between Carlyle and BlackRock Capital

Allowing for the 90-day total investment horizon Carlyle Group is expected to generate 3.89 times more return on investment than BlackRock Capital. However, Carlyle is 3.89 times more volatile than BlackRock Capital Allocation. It trades about 0.21 of its potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.08 per unit of risk. If you would invest  3,985  in Carlyle Group on August 30, 2024 and sell it today you would earn a total of  1,285  from holding Carlyle Group or generate 32.25% return on investment over 90 days.

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

Carlyle Group  vs.  BlackRock Capital Allocation

Carlyle Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carlyle Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Carlyle reported solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Carlyle and BlackRock Capital

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

The idea behind Carlyle Group and BlackRock Capital Allocation 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.