Correlation Between Blackline and Bottomline Technologies

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

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

Diversification Opportunities for Blackline and Bottomline Technologies

-0.1

Correlation Coefficient

Blackline  Bottomline Technologies

Good diversification

The 3 months correlation between Blackline and Bottomline is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Bottomline Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bottomline Technologies 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 Bottomline Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bottomline Technologies has no effect on the direction of Blackline i.e., Blackline and Bottomline Technologies go up and down completely randomly.

Pair Corralation between Blackline and Bottomline Technologies

If you would invest  4,900  in Blackline on January 25, 2024 and sell it today you would earn a total of  1,246  from holding Blackline or generate 25.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.81%
Values	Daily Returns

Blackline  vs.  Bottomline Technologies

Blackline

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Blackline is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Bottomline Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bottomline Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bottomline Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackline and Bottomline Technologies

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

The idea behind Blackline and Bottomline Technologies 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.