Correlation Between Blackline and Aspen Technology

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

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

Diversification Opportunities for Blackline and Aspen Technology

0.86

Correlation Coefficient

Blackline  Aspen Technology

Very poor diversification

The 3 months correlation between Blackline and Aspen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and Blackline 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 Blackline are associated (or correlated) with Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of Blackline i.e., Blackline and Aspen Technology go up and down completely randomly.

Pair Corralation between Blackline and Aspen Technology

Allowing for the 90-day total investment horizon Blackline is expected to generate 1.81 times more return on investment than Aspen Technology. However, Blackline is 1.81 times more volatile than Aspen Technology. It trades about 0.15 of its potential returns per unit of risk. Aspen Technology is currently generating about 0.11 per unit of risk. If you would invest  5,514  in Blackline on August 30, 2024 and sell it today you would earn a total of  674.00  from holding Blackline or generate 12.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.73%
Values	Daily Returns

Blackline  vs.  Aspen Technology

Blackline

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Blackline disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aspen Technology

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Blackline and Aspen Technology

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

The idea behind Blackline and Aspen Technology 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 Commodity Directory module to find actively traded commodities issued by global exchanges.