Correlation Between Blackline and Nice
Can any of the company-specific risk be diversified away by investing in both Blackline and Nice 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 Nice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackline and Nice Ltd ADR, you can compare the effects of market volatilities on Blackline and Nice 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 Nice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and Nice.
Diversification Opportunities for Blackline and Nice
Poor diversification
The 3 months correlation between Blackline and Nice is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Nice Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Ltd ADR 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 Nice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Ltd ADR has no effect on the direction of Blackline i.e., Blackline and Nice go up and down completely randomly.
Pair Corralation between Blackline and Nice
Allowing for the 90-day total investment horizon Blackline is expected to generate 0.75 times more return on investment than Nice. However, Blackline is 1.34 times less risky than Nice. It trades about 0.22 of its potential returns per unit of risk. Nice Ltd ADR is currently generating about 0.03 per unit of risk. If you would invest 5,657 in Blackline on August 26, 2024 and sell it today you would earn a total of 613.00 from holding Blackline or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackline vs. Nice Ltd ADR
Performance |
| Timeline |
| Blackline |
| Nice Ltd ADR |
Blackline and Nice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackline and Nice
The main advantage of trading using opposite Blackline and Nice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, Nice 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 Nice will offset losses from the drop in Nice's long position.The idea behind Blackline and Nice Ltd ADR 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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