Correlation Between Blackbaud and EPlus

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

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

Diversification Opportunities for Blackbaud and EPlus

0.81

Correlation Coefficient

Blackbaud  EPlus

Very poor diversification

The 3 months correlation between Blackbaud and EPlus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus inc 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 EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of Blackbaud i.e., Blackbaud and EPlus go up and down completely randomly.

Pair Corralation between Blackbaud and EPlus

Given the investment horizon of 90 days Blackbaud is expected to under-perform the EPlus. But the stock apears to be less risky and, when comparing its historical volatility, Blackbaud is 1.13 times less risky than EPlus. The stock trades about -0.12 of its potential returns per unit of risk. The ePlus inc is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  7,317  in ePlus inc on December 29, 2024 and sell it today you would lose (1,124) from holding ePlus inc or give up 15.36% of portfolio value over 90 days.

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

Blackbaud  vs.  ePlus inc

Blackbaud

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ePlus inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Blackbaud and EPlus

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

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