Correlation Between Hamilton Lane and Black Knight

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

By analyzing existing cross correlation between Hamilton Lane and Black Knight, you can compare the effects of market volatilities on Hamilton Lane and Black Knight 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 Hamilton Lane with a short position of Black Knight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton Lane and Black Knight.

Diversification Opportunities for Hamilton Lane and Black Knight

0.75

Correlation Coefficient

Hamilton Lane  Black Knight

Poor diversification

The 3 months correlation between Hamilton and Black is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton Lane and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight and Hamilton Lane 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 Hamilton Lane are associated (or correlated) with Black Knight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Knight has no effect on the direction of Hamilton Lane i.e., Hamilton Lane and Black Knight go up and down completely randomly.

Pair Corralation between Hamilton Lane and Black Knight

If you would invest  14,806  in Hamilton Lane on September 1, 2024 and sell it today you would earn a total of  4,434  from holding Hamilton Lane or generate 29.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

Hamilton Lane  vs.  Black Knight

Hamilton Lane

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hamilton Lane are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hamilton Lane exhibited solid returns over the last few months and may actually be approaching a breakup point.

Black Knight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hamilton Lane and Black Knight

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

The idea behind Hamilton Lane and Black Knight 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.