Correlation Between Black Knight and Clearwater Analytics

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

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

Diversification Opportunities for Black Knight and Clearwater Analytics

0.42

Correlation Coefficient

Black Knight  Clearwater Analytics

Very weak diversification

The 3 months correlation between Black and Clearwater is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and Clearwater Analytics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearwater Analytics and Black Knight 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 Black Knight are associated (or correlated) with Clearwater Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearwater Analytics has no effect on the direction of Black Knight i.e., Black Knight and Clearwater Analytics go up and down completely randomly.

Pair Corralation between Black Knight and Clearwater Analytics

If you would invest  2,566  in Clearwater Analytics Holdings on September 23, 2024 and sell it today you would earn a total of  304.00  from holding Clearwater Analytics Holdings or generate 11.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Black Knight  vs.  Clearwater Analytics Holdings

Black Knight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Clearwater Analytics

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Black Knight and Clearwater Analytics

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

The idea behind Black Knight and Clearwater Analytics Holdings 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.