Correlation Between Blackline and Black Knight
Can any of the company-specific risk be diversified away by investing in both Blackline and Black Knight 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 Black Knight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackline and Black Knight, you can compare the effects of market volatilities on Blackline and Black Knight 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 Black Knight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and Black Knight.
Diversification Opportunities for Blackline and Black Knight
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackline and Black is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight 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 Black Knight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Knight has no effect on the direction of Blackline i.e., Blackline and Black Knight go up and down completely randomly.
Pair Corralation between Blackline and Black Knight
Allowing for the 90-day total investment horizon Blackline is expected to generate 1.32 times less return on investment than Black Knight. In addition to that, Blackline is 1.92 times more volatile than Black Knight. It trades about 0.01 of its total potential returns per unit of risk. Black Knight is currently generating about 0.02 per unit of volatility. If you would invest 7,284 in Black Knight on January 24, 2024 and sell it today you would earn a total of 292.00 from holding Black Knight or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 67.88% |
| Values | Daily Returns |
Blackline vs. Black Knight
Performance |
| Timeline |
| Blackline |
| Black Knight |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Blackline and Black Knight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackline and Black Knight
The main advantage of trading using opposite Blackline and Black Knight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, Black Knight 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 Black Knight will offset losses from the drop in Black Knight's long position.The idea behind Blackline and Black Knight 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.| Black Knight vs. Paylocity Holdng | Black Knight vs. Paycor HCM | Black Knight vs. Blackbaud | Black Knight vs. Clearwater Analytics Holdings |
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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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