Correlation Between American Express and BlackRock TCP

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Can any of the company-specific risk be diversified away by investing in both American Express 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 American Express and BlackRock TCP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and BlackRock TCP Capital, you can compare the effects of market volatilities on American Express 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 American Express with a short position of BlackRock TCP. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and BlackRock TCP.

Diversification Opportunities for American Express and BlackRock TCP

AmericanBlackRockDiversified AwayAmericanBlackRockDiversified Away100%
0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between American and BlackRock is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding American Express 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 American Express 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 American Express 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 American Express i.e., American Express and BlackRock TCP go up and down completely randomly.

Pair Corralation between American Express and BlackRock TCP

Considering the 90-day investment horizon American Express is expected to generate 0.99 times more return on investment than BlackRock TCP. However, American Express is 1.01 times less risky than BlackRock TCP. It trades about 0.11 of its potential returns per unit of risk. BlackRock TCP Capital is currently generating about -0.01 per unit of risk. If you would invest  19,854  in American Express on November 26, 2024 and sell it today you would earn a total of  9,686  from holding American Express or generate 48.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

American Express  vs.  BlackRock TCP Capital

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 0510
JavaScript chart by amCharts 3.21.15AXP TCPC
       Timeline  
American Express 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Express is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb285290295300305310315320325
BlackRock TCP Capital 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
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 sound basic indicators, BlackRock TCP is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb8.48.68.899.29.4

American Express and BlackRock TCP Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.42-3.31-2.2-1.090.01881.112.243.374.5 0.050.100.150.20
JavaScript chart by amCharts 3.21.15AXP TCPC
       Returns  

Pair Trading with American Express and BlackRock TCP

The main advantage of trading using opposite American Express and BlackRock TCP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 American Express 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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