Correlation Between Blackline and Jfrog
Can any of the company-specific risk be diversified away by investing in both Blackline and Jfrog 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 Blackline and Jfrog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackline and Jfrog, you can compare the effects of market volatilities on Blackline and Jfrog 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 Blackline with a short position of Jfrog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and Jfrog.
Diversification Opportunities for Blackline and Jfrog
Very poor diversification
The 3 months correlation between Blackline and Jfrog is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Jfrog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jfrog and Blackline 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 Blackline are associated (or correlated) with Jfrog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jfrog has no effect on the direction of Blackline i.e., Blackline and Jfrog go up and down completely randomly.
Pair Corralation between Blackline and Jfrog
Allowing for the 90-day total investment horizon Blackline is expected to generate 1.04 times less return on investment than Jfrog. But when comparing it to its historical volatility, Blackline is 1.05 times less risky than Jfrog. It trades about 0.19 of its potential returns per unit of risk. Jfrog is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,924 in Jfrog on August 25, 2024 and sell it today you would earn a total of 291.00 from holding Jfrog or generate 9.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackline vs. Jfrog
Performance |
| Timeline |
| Blackline |
| Jfrog |
Blackline and Jfrog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackline and Jfrog
The main advantage of trading using opposite Blackline and Jfrog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, Jfrog 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 Jfrog will offset losses from the drop in Jfrog's long position.The idea behind Blackline and Jfrog 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.
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