Correlation Between BKV and DocuSign

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

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

Diversification Opportunities for BKV and DocuSign

0.67

Correlation Coefficient

BKV  DocuSign

Poor diversification

The 3 months correlation between BKV and DocuSign is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and DocuSign in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DocuSign and BKV 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 BKV Corporation are associated (or correlated) with DocuSign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DocuSign has no effect on the direction of BKV i.e., BKV and DocuSign go up and down completely randomly.

Pair Corralation between BKV and DocuSign

Considering the 90-day investment horizon BKV Corporation is expected to under-perform the DocuSign. But the stock apears to be less risky and, when comparing its historical volatility, BKV Corporation is 3.47 times less risky than DocuSign. The stock trades about -0.02 of its potential returns per unit of risk. The DocuSign is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8,303  in DocuSign on September 23, 2024 and sell it today you would earn a total of  1,138  from holding DocuSign or generate 13.71% return on investment over 90 days.

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

BKV Corp.  vs.  DocuSign

BKV Corporation

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

DocuSign

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DocuSign are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, DocuSign unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BKV and DocuSign

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

The idea behind BKV Corporation and DocuSign 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.