Correlation Between Bridgeline Digital and Rekor Systems

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

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

Diversification Opportunities for Bridgeline Digital and Rekor Systems

0.86

Correlation Coefficient

Bridgeline Digital  Rekor Systems

Very poor diversification

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

Pair Corralation between Bridgeline Digital and Rekor Systems

Given the investment horizon of 90 days Bridgeline Digital is expected to generate 0.61 times more return on investment than Rekor Systems. However, Bridgeline Digital is 1.65 times less risky than Rekor Systems. It trades about 0.04 of its potential returns per unit of risk. Rekor Systems is currently generating about 0.02 per unit of risk. If you would invest  143.00  in Bridgeline Digital on December 27, 2024 and sell it today you would earn a total of  2.00  from holding Bridgeline Digital or generate 1.4% return on investment over 90 days.

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

Bridgeline Digital  vs.  Rekor Systems

Bridgeline Digital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgeline Digital are ranked lower than 2 (%) 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.

Rekor Systems

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rekor Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal forward-looking signals, Rekor Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bridgeline Digital and Rekor Systems

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

The idea behind Bridgeline Digital and Rekor Systems 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 Global Correlations module to find global opportunities by holding instruments from different markets.