Correlation Between Blackline and Marketwise

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

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

Diversification Opportunities for Blackline and Marketwise

-0.89

Correlation Coefficient

Blackline  Marketwise

Pay attention - limited upside

The 3 months correlation between Blackline and Marketwise is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Marketwise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marketwise 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 Marketwise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marketwise has no effect on the direction of Blackline i.e., Blackline and Marketwise go up and down completely randomly.

Pair Corralation between Blackline and Marketwise

Allowing for the 90-day total investment horizon Blackline is expected to generate 0.36 times more return on investment than Marketwise. However, Blackline is 2.74 times less risky than Marketwise. It trades about 0.23 of its potential returns per unit of risk. Marketwise is currently generating about -0.1 per unit of risk. If you would invest  4,897  in Blackline on September 4, 2024 and sell it today you would earn a total of  1,340  from holding Blackline or generate 27.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Blackline  vs.  Marketwise

Blackline

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 17 (%) 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.

Marketwise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marketwise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Blackline and Marketwise

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

The idea behind Blackline and Marketwise 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.