Correlation Between Blackbaud and NetSol Technologies

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

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

Diversification Opportunities for Blackbaud and NetSol Technologies

0.42

Correlation Coefficient

Blackbaud  NetSol Technologies

Very weak diversification

The 3 months correlation between Blackbaud and NetSol is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and NetSol Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetSol Technologies 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 NetSol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetSol Technologies has no effect on the direction of Blackbaud i.e., Blackbaud and NetSol Technologies go up and down completely randomly.

Pair Corralation between Blackbaud and NetSol Technologies

Given the investment horizon of 90 days Blackbaud is expected to generate 0.58 times more return on investment than NetSol Technologies. However, Blackbaud is 1.72 times less risky than NetSol Technologies. It trades about 0.03 of its potential returns per unit of risk. NetSol Technologies is currently generating about 0.01 per unit of risk. If you would invest  6,143  in Blackbaud on October 4, 2024 and sell it today you would earn a total of  1,229  from holding Blackbaud or generate 20.01% return on investment over 90 days.

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

Blackbaud  vs.  NetSol Technologies

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.

NetSol Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NetSol Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Blackbaud and NetSol Technologies

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

The idea behind Blackbaud and NetSol Technologies 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.