Correlation Between Blackbaud and Dubber

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

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

Diversification Opportunities for Blackbaud and Dubber

-0.31

Correlation Coefficient

Blackbaud  Dubber

Very good diversification

The 3 months correlation between Blackbaud and Dubber is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and Dubber Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dubber Limited and Blackbaud 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 Blackbaud are associated (or correlated) with Dubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dubber Limited has no effect on the direction of Blackbaud i.e., Blackbaud and Dubber go up and down completely randomly.

Pair Corralation between Blackbaud and Dubber

Given the investment horizon of 90 days Blackbaud is expected to generate 0.38 times more return on investment than Dubber. However, Blackbaud is 2.65 times less risky than Dubber. It trades about -0.41 of its potential returns per unit of risk. Dubber Limited is currently generating about -0.21 per unit of risk. If you would invest  8,641  in Blackbaud on September 27, 2024 and sell it today you would lose (1,013) from holding Blackbaud or give up 11.72% of portfolio value over 90 days.

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

Blackbaud  vs.  Dubber Limited

Blackbaud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Dubber Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Dubber reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackbaud and Dubber

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

The idea behind Blackbaud and Dubber Limited 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.