Correlation Between Blackbaud and SimilarWeb

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

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

Diversification Opportunities for Blackbaud and SimilarWeb

-0.03

Correlation Coefficient

Blackbaud  SimilarWeb

Good diversification

The 3 months correlation between Blackbaud and SimilarWeb is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and SimilarWeb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SimilarWeb 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 SimilarWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SimilarWeb has no effect on the direction of Blackbaud i.e., Blackbaud and SimilarWeb go up and down completely randomly.

Pair Corralation between Blackbaud and SimilarWeb

Given the investment horizon of 90 days Blackbaud is expected to under-perform the SimilarWeb. But the stock apears to be less risky and, when comparing its historical volatility, Blackbaud is 1.01 times less risky than SimilarWeb. The stock trades about -0.01 of its potential returns per unit of risk. The SimilarWeb is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  816.00  in SimilarWeb on September 13, 2024 and sell it today you would earn a total of  402.00  from holding SimilarWeb or generate 49.26% return on investment over 90 days.

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

Blackbaud  vs.  SimilarWeb

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 somewhat strong forward-looking signals, Blackbaud is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SimilarWeb

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SimilarWeb are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SimilarWeb sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackbaud and SimilarWeb

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

The idea behind Blackbaud and SimilarWeb 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.