Correlation Between BASE and Blackbaud

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

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

Diversification Opportunities for BASE and Blackbaud

-0.56

Correlation Coefficient

BASE  Blackbaud

Excellent diversification

The 3 months correlation between BASE and Blackbaud is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Blackbaud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackbaud and BASE 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 BASE Inc are associated (or correlated) with Blackbaud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackbaud has no effect on the direction of BASE i.e., BASE and Blackbaud go up and down completely randomly.

Pair Corralation between BASE and Blackbaud

Assuming the 90 days horizon BASE Inc is expected to generate 5.03 times more return on investment than Blackbaud. However, BASE is 5.03 times more volatile than Blackbaud. It trades about 0.27 of its potential returns per unit of risk. Blackbaud is currently generating about -0.14 per unit of risk. If you would invest  150.00  in BASE Inc on October 10, 2024 and sell it today you would earn a total of  54.00  from holding BASE Inc or generate 36.0% return on investment over 90 days.

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

BASE Inc  vs.  Blackbaud

BASE Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Blackbaud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with BASE and Blackbaud

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

The idea behind BASE Inc and Blackbaud 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 CEOs Directory module to screen CEOs from public companies around the world.