Correlation Between BlackRock TCP and Starfleet Innotech

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

Diversification Opportunities for BlackRock TCP and Starfleet Innotech

0.58

Correlation Coefficient

BlackRock TCP  Starfleet Innotech

Very weak diversification

The 3 months correlation between BlackRock and Starfleet is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock TCP Capital and Starfleet Innotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starfleet Innotech 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 Starfleet Innotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starfleet Innotech has no effect on the direction of BlackRock TCP i.e., BlackRock TCP and Starfleet Innotech go up and down completely randomly.

Pair Corralation between BlackRock TCP and Starfleet Innotech

Given the investment horizon of 90 days BlackRock TCP is expected to generate 11.21 times less return on investment than Starfleet Innotech. But when comparing it to its historical volatility, BlackRock TCP Capital is 9.97 times less risky than Starfleet Innotech. It trades about 0.07 of its potential returns per unit of risk. Starfleet Innotech is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.31  in Starfleet Innotech on September 27, 2024 and sell it today you would lose (0.01) from holding Starfleet Innotech or give up 3.23% of portfolio value over 90 days.

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

BlackRock TCP Capital  vs.  Starfleet Innotech

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.

Starfleet Innotech

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Starfleet Innotech are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, Starfleet Innotech displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock TCP and Starfleet Innotech

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

The idea behind BlackRock TCP Capital and Starfleet Innotech 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.