Correlation Between Cerberus Cyber and Bridgeline Digital

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

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

Diversification Opportunities for Cerberus Cyber and Bridgeline Digital

-0.18

Correlation Coefficient

Cerberus Cyber  Bridgeline Digital

Good diversification

The 3 months correlation between Cerberus and Bridgeline is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cerberus Cyber Sentinel and Bridgeline Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgeline Digital and Cerberus Cyber 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 Cerberus Cyber Sentinel 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 Cerberus Cyber i.e., Cerberus Cyber and Bridgeline Digital go up and down completely randomly.

Pair Corralation between Cerberus Cyber and Bridgeline Digital

Given the investment horizon of 90 days Cerberus Cyber is expected to generate 5.1 times less return on investment than Bridgeline Digital. In addition to that, Cerberus Cyber is 1.4 times more volatile than Bridgeline Digital. It trades about 0.01 of its total potential returns per unit of risk. Bridgeline Digital is currently generating about 0.09 per unit of volatility. If you would invest  116.00  in Bridgeline Digital on November 28, 2024 and sell it today you would earn a total of  31.00  from holding Bridgeline Digital or generate 26.72% return on investment over 90 days.

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

Cerberus Cyber Sentinel  vs.  Bridgeline Digital

Cerberus Cyber Sentinel

Risk-Adjusted Performance

Weak

Over the last 90 days Cerberus Cyber Sentinel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Cerberus Cyber may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Bridgeline Digital

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgeline Digital are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Bridgeline Digital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cerberus Cyber and Bridgeline Digital

The main advantage of trading using opposite Cerberus Cyber and Bridgeline Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerberus Cyber 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 Cerberus Cyber Sentinel 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..