Correlation Between Blackbaud and PTC

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

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

Diversification Opportunities for Blackbaud and PTC

0.23

Correlation Coefficient

Blackbaud  PTC

Modest diversification

The 3 months correlation between Blackbaud and PTC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC 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 PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Blackbaud i.e., Blackbaud and PTC go up and down completely randomly.

Pair Corralation between Blackbaud and PTC

Given the investment horizon of 90 days Blackbaud is expected to generate 1.33 times less return on investment than PTC. In addition to that, Blackbaud is 1.43 times more volatile than PTC Inc. It trades about 0.03 of its total potential returns per unit of risk. PTC Inc is currently generating about 0.06 per unit of volatility. If you would invest  13,379  in PTC Inc on October 3, 2024 and sell it today you would earn a total of  5,008  from holding PTC Inc or generate 37.43% return on investment over 90 days.

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

Blackbaud  vs.  PTC Inc

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.

PTC Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PTC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackbaud and PTC

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

The idea behind Blackbaud and PTC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.