Correlation Between Blackline and Pegasystems
Can any of the company-specific risk be diversified away by investing in both Blackline and Pegasystems 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 Pegasystems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackline and Pegasystems, you can compare the effects of market volatilities on Blackline and Pegasystems 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 Pegasystems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and Pegasystems.
Diversification Opportunities for Blackline and Pegasystems
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Blackline and Pegasystems is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems 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 Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Blackline i.e., Blackline and Pegasystems go up and down completely randomly.
Pair Corralation between Blackline and Pegasystems
Allowing for the 90-day total investment horizon Blackline is expected to generate 2.62 times less return on investment than Pegasystems. In addition to that, Blackline is 1.01 times more volatile than Pegasystems. It trades about 0.03 of its total potential returns per unit of risk. Pegasystems is currently generating about 0.09 per unit of volatility. If you would invest 6,558 in Pegasystems on August 25, 2024 and sell it today you would earn a total of 2,594 from holding Pegasystems or generate 39.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackline vs. Pegasystems
Performance |
| Timeline |
| Blackline |
| Pegasystems |
Blackline and Pegasystems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackline and Pegasystems
The main advantage of trading using opposite Blackline and Pegasystems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, Pegasystems 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 Pegasystems will offset losses from the drop in Pegasystems' long position.The idea behind Blackline and Pegasystems 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.| Pegasystems vs. Wex Inc | Pegasystems vs. Cognex | Pegasystems vs. Progress Software | Pegasystems vs. Fair Isaac |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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