Correlation Between SimilarWeb and Blackbaud

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

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

Diversification Opportunities for SimilarWeb and Blackbaud

0.4

Correlation Coefficient

SimilarWeb  Blackbaud

Very weak diversification

The 3 months correlation between SimilarWeb and Blackbaud is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SimilarWeb and Blackbaud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackbaud and SimilarWeb 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 SimilarWeb 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 SimilarWeb i.e., SimilarWeb and Blackbaud go up and down completely randomly.

Pair Corralation between SimilarWeb and Blackbaud

Given the investment horizon of 90 days SimilarWeb is expected to under-perform the Blackbaud. In addition to that, SimilarWeb is 2.45 times more volatile than Blackbaud. It trades about -0.08 of its total potential returns per unit of risk. Blackbaud is currently generating about -0.18 per unit of volatility. If you would invest  8,289  in Blackbaud on December 4, 2024 and sell it today you would lose (1,758) from holding Blackbaud or give up 21.21% of portfolio value over 90 days.

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

SimilarWeb  vs.  Blackbaud

SimilarWeb

Risk-Adjusted Performance

Very Weak

Over the last 90 days SimilarWeb has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Blackbaud

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward-looking signals remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SimilarWeb and Blackbaud

The main advantage of trading using opposite SimilarWeb and Blackbaud positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SimilarWeb 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 SimilarWeb 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.