Correlation Between Blackbaud and Vertex

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

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

Diversification Opportunities for Blackbaud and Vertex

-0.28

Correlation Coefficient

Blackbaud  Vertex

Very good diversification

The 3 months correlation between Blackbaud and Vertex is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and Vertex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex 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 Vertex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex has no effect on the direction of Blackbaud i.e., Blackbaud and Vertex go up and down completely randomly.

Pair Corralation between Blackbaud and Vertex

Given the investment horizon of 90 days Blackbaud is expected to under-perform the Vertex. In addition to that, Blackbaud is 1.0 times more volatile than Vertex. It trades about -0.42 of its total potential returns per unit of risk. Vertex is currently generating about -0.21 per unit of volatility. If you would invest  5,640  in Vertex on October 5, 2024 and sell it today you would lose (320.00) from holding Vertex or give up 5.67% of portfolio value over 90 days.

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

Blackbaud  vs.  Vertex

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.

Vertex

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vertex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackbaud and Vertex

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

The idea behind Blackbaud and Vertex 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.