Correlation Between Itron and Blacksky Technology

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

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

Diversification Opportunities for Itron and Blacksky Technology

-0.64

Correlation Coefficient

Itron  Blacksky Technology

Excellent diversification

The 3 months correlation between Itron and Blacksky is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Itron Inc and Blacksky Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blacksky Technology and Itron 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 Itron Inc are associated (or correlated) with Blacksky Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blacksky Technology has no effect on the direction of Itron i.e., Itron and Blacksky Technology go up and down completely randomly.

Pair Corralation between Itron and Blacksky Technology

Given the investment horizon of 90 days Itron Inc is expected to generate 0.45 times more return on investment than Blacksky Technology. However, Itron Inc is 2.23 times less risky than Blacksky Technology. It trades about 0.0 of its potential returns per unit of risk. Blacksky Technology is currently generating about -0.08 per unit of risk. If you would invest  10,600  in Itron Inc on December 4, 2024 and sell it today you would lose (78.00) from holding Itron Inc or give up 0.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Itron Inc  vs.  Blacksky Technology

Itron Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Itron Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Blacksky Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blacksky Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Blacksky Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itron and Blacksky Technology

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

The idea behind Itron Inc and Blacksky Technology 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.