Correlation Between Clearwater Analytics and Black Knight

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Can any of the company-specific risk be diversified away by investing in both Clearwater Analytics 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 Clearwater Analytics and Black Knight into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearwater Analytics Holdings and Black Knight, you can compare the effects of market volatilities on Clearwater Analytics 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 Clearwater Analytics with a short position of Black Knight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearwater Analytics and Black Knight.

Diversification Opportunities for Clearwater Analytics and Black Knight

0.66
  Correlation Coefficient

Poor diversification

The 3 months correlation between Clearwater and Black is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Analytics Holdings and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight and Clearwater Analytics 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 Clearwater Analytics Holdings 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 Clearwater Analytics i.e., Clearwater Analytics and Black Knight go up and down completely randomly.

Pair Corralation between Clearwater Analytics and Black Knight

Given the investment horizon of 90 days Clearwater Analytics is expected to generate 8.88 times less return on investment than Black Knight. In addition to that, Clearwater Analytics is 1.02 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 0.07 per unit of volatility. If you would invest  6,089  in Black Knight on March 21, 2024 and sell it today you would earn a total of  991.00  from holding Black Knight or generate 16.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy35.23%
ValuesDaily Returns

Clearwater Analytics Holdings  vs.  Black Knight

 Performance 
       Timeline  
Clearwater Analytics 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Clearwater Analytics Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Clearwater Analytics may actually be approaching a critical reversion point that can send shares even higher in July 2024.
Black Knight 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Clearwater Analytics and Black Knight Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Clearwater Analytics and Black Knight

The main advantage of trading using opposite Clearwater Analytics and Black Knight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearwater Analytics 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 Clearwater Analytics Holdings 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.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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