Correlation Between BlackRock TCP and Stellus Capital

Can any of the company-specific risk be diversified away by investing in both BlackRock TCP and Stellus 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 BlackRock TCP and Stellus Capital 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 Stellus Capital Investment, you can compare the effects of market volatilities on BlackRock TCP and Stellus 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 BlackRock TCP with a short position of Stellus Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock TCP and Stellus Capital.

Diversification Opportunities for BlackRock TCP and Stellus Capital

-0.07

Correlation Coefficient

BlackRock TCP  Stellus Capital

Good diversification

The 3 months correlation between BlackRock and Stellus is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital and Stellus Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellus Capital Inve 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 Stellus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellus Capital Inve has no effect on the direction of BlackRock TCP i.e., BlackRock TCP and Stellus Capital go up and down completely randomly.

Pair Corralation between BlackRock TCP and Stellus Capital

Given the investment horizon of 90 days BlackRock TCP Capital is expected to generate 2.34 times more return on investment than Stellus Capital. However, BlackRock TCP is 2.34 times more volatile than Stellus Capital Investment. It trades about 0.07 of its potential returns per unit of risk. Stellus Capital Investment is currently generating about 0.08 per unit of risk. If you would invest  872.00  in BlackRock TCP Capital on September 3, 2024 and sell it today you would earn a total of  58.00  from holding BlackRock TCP Capital or generate 6.65% return on investment over 90 days.

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

BlackRock TCP Capital  vs.  Stellus Capital Investment

BlackRock TCP Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock TCP Capital are ranked lower than 5 (%) 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.

Stellus Capital Inve

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Stellus Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock TCP and Stellus Capital

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

The idea behind BlackRock TCP Capital and Stellus Capital Investment 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.