Correlation Between Bridgeline Digital and Ironnet

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

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

Diversification Opportunities for Bridgeline Digital and Ironnet

-0.2

Correlation Coefficient

Bridgeline Digital  Ironnet

Good diversification

The 3 months correlation between Bridgeline and Ironnet is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bridgeline Digital and Ironnet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironnet and Bridgeline Digital 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 Bridgeline Digital are associated (or correlated) with Ironnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironnet has no effect on the direction of Bridgeline Digital i.e., Bridgeline Digital and Ironnet go up and down completely randomly.

Pair Corralation between Bridgeline Digital and Ironnet

Given the investment horizon of 90 days Bridgeline Digital is expected to generate 0.32 times more return on investment than Ironnet. However, Bridgeline Digital is 3.12 times less risky than Ironnet. It trades about 0.04 of its potential returns per unit of risk. Ironnet is currently generating about 0.01 per unit of risk. If you would invest  105.00  in Bridgeline Digital on September 20, 2024 and sell it today you would earn a total of  52.00  from holding Bridgeline Digital or generate 49.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.43%
Values	Daily Returns

Bridgeline Digital  vs.  Ironnet

Bridgeline Digital

Risk-Adjusted Performance

6 of 100

Modest

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

Ironnet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ironnet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ironnet is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bridgeline Digital and Ironnet

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

The idea behind Bridgeline Digital and Ironnet 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.