Correlation Between Terran Orbital and Blacksky Technology

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

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

Diversification Opportunities for Terran Orbital and Blacksky Technology

-0.46

Correlation Coefficient

Terran Orbital  Blacksky Technology

Very good diversification

The 3 months correlation between Terran and Blacksky is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Terran Orbital Corp and Blacksky Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blacksky Technology and Terran Orbital 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 Terran Orbital Corp 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 Terran Orbital i.e., Terran Orbital and Blacksky Technology go up and down completely randomly.

Pair Corralation between Terran Orbital and Blacksky Technology

If you would invest  905.00  in Blacksky Technology on September 18, 2024 and sell it today you would earn a total of  285.00  from holding Blacksky Technology or generate 31.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	4.76%
Values	Daily Returns

Terran Orbital Corp  vs.  Blacksky Technology

Terran Orbital Corp

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Terran Orbital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively abnormal basic indicators, Terran Orbital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blacksky Technology

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blacksky Technology are ranked lower than 16 (%) 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 Terran Orbital and Blacksky Technology

The main advantage of trading using opposite Terran Orbital and Blacksky Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terran Orbital 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 Terran Orbital Corp 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.

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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.