Correlation Between EPlus and Blackbaud

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

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

Diversification Opportunities for EPlus and Blackbaud

0.28

Correlation Coefficient

EPlus  Blackbaud

Modest diversification

The 3 months correlation between EPlus and Blackbaud is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding ePlus inc and Blackbaud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackbaud and EPlus 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 ePlus inc are associated (or correlated) with Blackbaud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackbaud has no effect on the direction of EPlus i.e., EPlus and Blackbaud go up and down completely randomly.

Pair Corralation between EPlus and Blackbaud

Given the investment horizon of 90 days ePlus inc is expected to under-perform the Blackbaud. In addition to that, EPlus is 1.15 times more volatile than Blackbaud. It trades about -0.07 of its total potential returns per unit of risk. Blackbaud is currently generating about -0.02 per unit of volatility. If you would invest  8,477  in Blackbaud on September 13, 2024 and sell it today you would lose (451.00) from holding Blackbaud or give up 5.32% of portfolio value over 90 days.

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

ePlus inc  vs.  Blackbaud

ePlus inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Blackbaud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Blackbaud is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EPlus and Blackbaud

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

The idea behind ePlus inc and Blackbaud 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.