Correlation Between Image Protect and Blackline Safety

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

By analyzing existing cross correlation between Image Protect and Blackline Safety Corp, you can compare the effects of market volatilities on Image Protect and Blackline Safety 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 Image Protect with a short position of Blackline Safety. Check out your portfolio center. Please also check ongoing floating volatility patterns of Image Protect and Blackline Safety.

Diversification Opportunities for Image Protect and Blackline Safety

0.17

Correlation Coefficient

Image Protect  Blackline Safety

Average diversification

The 3 months correlation between Image and Blackline is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Image Protect and Blackline Safety Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline Safety Corp and Image Protect 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 Image Protect are associated (or correlated) with Blackline Safety. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline Safety Corp has no effect on the direction of Image Protect i.e., Image Protect and Blackline Safety go up and down completely randomly.

Pair Corralation between Image Protect and Blackline Safety

Given the investment horizon of 90 days Image Protect is expected to generate 47.24 times more return on investment than Blackline Safety. However, Image Protect is 47.24 times more volatile than Blackline Safety Corp. It trades about 0.13 of its potential returns per unit of risk. Blackline Safety Corp is currently generating about 0.03 per unit of risk. If you would invest  0.02  in Image Protect on December 30, 2024 and sell it today you would lose (0.01) from holding Image Protect or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Image Protect  vs.  Blackline Safety Corp

Image Protect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Image Protect are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Image Protect disclosed solid returns over the last few months and may actually be approaching a breakup point.

Blackline Safety Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline Safety Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Blackline Safety is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Image Protect and Blackline Safety

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

The idea behind Image Protect and Blackline Safety Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.