Correlation Between ACI Worldwide and Backblaze

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

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

Diversification Opportunities for ACI Worldwide and Backblaze

-0.12

Correlation Coefficient

ACI Worldwide  Backblaze

Good diversification

The 3 months correlation between ACI and Backblaze is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and Backblaze in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Backblaze and ACI Worldwide 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 ACI Worldwide are associated (or correlated) with Backblaze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Backblaze has no effect on the direction of ACI Worldwide i.e., ACI Worldwide and Backblaze go up and down completely randomly.

Pair Corralation between ACI Worldwide and Backblaze

Given the investment horizon of 90 days ACI Worldwide is expected to under-perform the Backblaze. But the stock apears to be less risky and, when comparing its historical volatility, ACI Worldwide is 2.89 times less risky than Backblaze. The stock trades about -0.21 of its potential returns per unit of risk. The Backblaze is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  611.00  in Backblaze on November 28, 2024 and sell it today you would earn a total of  97.00  from holding Backblaze or generate 15.88% return on investment over 90 days.

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

ACI Worldwide  vs.  Backblaze

ACI Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days ACI Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Backblaze

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Backblaze are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Backblaze may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with ACI Worldwide and Backblaze

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

The idea behind ACI Worldwide and Backblaze 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.