Correlation Between Logility and Blackline

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

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

Diversification Opportunities for Logility and Blackline

0.37

Correlation Coefficient

Logility  Blackline

Weak diversification

The 3 months correlation between Logility and Blackline is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Logility and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline and Logility 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 Logility are associated (or correlated) with Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of Logility i.e., Logility and Blackline go up and down completely randomly.

Pair Corralation between Logility and Blackline

Given the investment horizon of 90 days Logility is expected to generate 2.02 times more return on investment than Blackline. However, Logility is 2.02 times more volatile than Blackline. It trades about 0.15 of its potential returns per unit of risk. Blackline is currently generating about -0.02 per unit of risk. If you would invest  1,010  in Logility on September 25, 2024 and sell it today you would earn a total of  84.00  from holding Logility or generate 8.32% return on investment over 90 days.

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

Logility  vs.  Blackline

Logility

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Logility are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Logility is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Blackline

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Blackline disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logility and Blackline

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

The idea behind Logility and Blackline 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.