Correlation Between Blackstone and Redwood Trust
Can any of the company-specific risk be diversified away by investing in both Blackstone and Redwood Trust 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 Blackstone and Redwood Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackstone Group and Redwood Trust, you can compare the effects of market volatilities on Blackstone and Redwood Trust 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 Blackstone with a short position of Redwood Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackstone and Redwood Trust.
Diversification Opportunities for Blackstone and Redwood Trust
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Blackstone and Redwood is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Blackstone Group and Redwood Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Redwood Trust and Blackstone 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 Blackstone Group are associated (or correlated) with Redwood Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Redwood Trust has no effect on the direction of Blackstone i.e., Blackstone and Redwood Trust go up and down completely randomly.
Pair Corralation between Blackstone and Redwood Trust
Allowing for the 90-day total investment horizon Blackstone Group is expected to generate 1.67 times more return on investment than Redwood Trust. However, Blackstone is 1.67 times more volatile than Redwood Trust. It trades about 0.34 of its potential returns per unit of risk. Redwood Trust is currently generating about -0.06 per unit of risk. If you would invest 16,814 in Blackstone Group on September 2, 2024 and sell it today you would earn a total of 2,295 from holding Blackstone Group or generate 13.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackstone Group vs. Redwood Trust
Performance |
| Timeline |
| Blackstone Group |
| Redwood Trust |
Blackstone and Redwood Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackstone and Redwood Trust
The main advantage of trading using opposite Blackstone and Redwood Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackstone position performs unexpectedly, Redwood Trust 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 Redwood Trust will offset losses from the drop in Redwood Trust's long position.| Blackstone vs. T Rowe Price | Blackstone vs. State Street Corp | Blackstone vs. KKR Co LP | Blackstone vs. Brookfield Asset Management |
| Redwood Trust vs. Two Harbors Investments | Redwood Trust vs. AG Mortgage Investment | Redwood Trust vs. Invesco Mortgage Capital | Redwood Trust vs. MFA Financial |
Check out your portfolio center.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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