Correlation Between Euronet Worldwide and Bridgeline Digital

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

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

Diversification Opportunities for Euronet Worldwide and Bridgeline Digital

-0.75

Correlation Coefficient

Euronet Worldwide  Bridgeline Digital

Pay attention - limited upside

The 3 months correlation between Euronet and Bridgeline is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Euronet Worldwide and Bridgeline Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgeline Digital and Euronet Worldwide 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 Euronet Worldwide 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 Euronet Worldwide i.e., Euronet Worldwide and Bridgeline Digital go up and down completely randomly.

Pair Corralation between Euronet Worldwide and Bridgeline Digital

Given the investment horizon of 90 days Euronet Worldwide is expected to generate 14.34 times less return on investment than Bridgeline Digital. But when comparing it to its historical volatility, Euronet Worldwide is 4.43 times less risky than Bridgeline Digital. It trades about 0.04 of its potential returns per unit of risk. Bridgeline Digital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  110.00  in Bridgeline Digital on November 19, 2024 and sell it today you would earn a total of  65.00  from holding Bridgeline Digital or generate 59.09% return on investment over 90 days.

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

Euronet Worldwide  vs.  Bridgeline Digital

Euronet Worldwide

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Euronet Worldwide are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Euronet Worldwide is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bridgeline Digital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bridgeline Digital are ranked lower than 10 (%) 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 Euronet Worldwide and Bridgeline Digital

The main advantage of trading using opposite Euronet Worldwide and Bridgeline Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronet Worldwide 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 Euronet Worldwide 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.