Correlation Between Blackline and LSI Industries

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

By analyzing existing cross correlation between Blackline and LSI Industries, you can compare the effects of market volatilities on Blackline and LSI Industries 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 LSI Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and LSI Industries.

Diversification Opportunities for Blackline and LSI Industries

-0.44

Correlation Coefficient

Blackline  LSI Industries

Very good diversification

The 3 months correlation between Blackline and LSI is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and LSI Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LSI Industries 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 LSI Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LSI Industries has no effect on the direction of Blackline i.e., Blackline and LSI Industries go up and down completely randomly.

Pair Corralation between Blackline and LSI Industries

Allowing for the 90-day total investment horizon Blackline is expected to under-perform the LSI Industries. In addition to that, Blackline is 1.41 times more volatile than LSI Industries. It trades about -0.38 of its total potential returns per unit of risk. LSI Industries is currently generating about 0.14 per unit of volatility. If you would invest  1,467  in LSI Industries on March 2, 2024 and sell it today you would earn a total of  67.00  from holding LSI Industries or generate 4.57% return on investment over 90 days.

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

Blackline  vs.  LSI Industries

Blackline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in July 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

LSI Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LSI Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LSI Industries may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Blackline and LSI Industries

The main advantage of trading using opposite Blackline and LSI Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, LSI Industries 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 LSI Industries will offset losses from the drop in LSI Industries' long position.

The idea behind Blackline and LSI Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.