Correlation Between CiT and Bridgeline Digital

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

By analyzing existing cross correlation between CiT Inc and Bridgeline Digital, you can compare the effects of market volatilities on CiT and Bridgeline Digital 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 CiT with a short position of Bridgeline Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CiT and Bridgeline Digital.

Diversification Opportunities for CiT and Bridgeline Digital

0.14

Correlation Coefficient

CiT  Bridgeline Digital

Average diversification

The 3 months correlation between CiT and Bridgeline is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CiT Inc and Bridgeline Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgeline Digital and CiT 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 CiT Inc are associated (or correlated) with Bridgeline Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgeline Digital has no effect on the direction of CiT i.e., CiT and Bridgeline Digital go up and down completely randomly.

Pair Corralation between CiT and Bridgeline Digital

Given the investment horizon of 90 days CiT Inc is expected to generate 0.35 times more return on investment than Bridgeline Digital. However, CiT Inc is 2.84 times less risky than Bridgeline Digital. It trades about 0.02 of its potential returns per unit of risk. Bridgeline Digital is currently generating about -0.01 per unit of risk. If you would invest  604.00  in CiT Inc on December 29, 2024 and sell it today you would earn a total of  5.00  from holding CiT Inc or generate 0.83% return on investment over 90 days.

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

CiT Inc  vs.  Bridgeline Digital

CiT Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CiT Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CiT is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bridgeline Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridgeline Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Bridgeline Digital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CiT and Bridgeline Digital

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

The idea behind CiT Inc and Bridgeline Digital 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.