Correlation Between OneSpan and Bridgeline Digital

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

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

Diversification Opportunities for OneSpan and Bridgeline Digital

0.75

Correlation Coefficient

OneSpan  Bridgeline Digital

Poor diversification

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

Pair Corralation between OneSpan and Bridgeline Digital

Given the investment horizon of 90 days OneSpan is expected to under-perform the Bridgeline Digital. But the stock apears to be less risky and, when comparing its historical volatility, OneSpan is 2.69 times less risky than Bridgeline Digital. The stock trades about -0.11 of its potential returns per unit of risk. The Bridgeline Digital is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  174.00  in Bridgeline Digital on December 30, 2024 and sell it today you would lose (27.00) from holding Bridgeline Digital or give up 15.52% of portfolio value over 90 days.

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

OneSpan  vs.  Bridgeline Digital

OneSpan

Risk-Adjusted Performance

Very Weak

Over the last 90 days OneSpan has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Bridgeline Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bridgeline Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Bridgeline Digital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with OneSpan and Bridgeline Digital

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

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.