Correlation Between Blackline and Margo Caribe

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

Diversification Opportunities for Blackline and Margo Caribe

0.25
  Correlation Coefficient

Modest diversification

The 3 months correlation between Blackline and Margo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Margo Caribe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Margo Caribe 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 Margo Caribe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Margo Caribe has no effect on the direction of Blackline i.e., Blackline and Margo Caribe go up and down completely randomly.

Pair Corralation between Blackline and Margo Caribe

Allowing for the 90-day total investment horizon Blackline is expected to generate 1.37 times more return on investment than Margo Caribe. However, Blackline is 1.37 times more volatile than Margo Caribe. It trades about 0.29 of its potential returns per unit of risk. Margo Caribe is currently generating about -0.16 per unit of risk. If you would invest  4,902  in Blackline on September 4, 2022 and sell it today you would earn a total of  1,827  from holding Blackline or generate 37.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Blackline  vs.  Margo Caribe

 Performance (%) 
       Timeline  
Blackline 
Blackline Performance
2 of 100
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. Even with relatively uncertain essential indicators, Blackline may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Blackline Price Channel

Margo Caribe 
Margo Performance
0 of 100
Over the last 90 days Margo Caribe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Margo Price Channel

Blackline and Margo Caribe Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blackline and Margo Caribe

The main advantage of trading using opposite Blackline and Margo Caribe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, Margo Caribe 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 Margo Caribe will offset losses from the drop in Margo Caribe's long position.
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The idea behind Blackline and Margo Caribe 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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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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