Correlation Between 3D Systems and Blackline

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Can any of the company-specific risk be diversified away by investing in both 3D Systems and Blackline 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 3D Systems and Blackline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3D Systems and Blackline, you can compare the effects of market volatilities on 3D Systems and Blackline 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 3D Systems with a short position of Blackline. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3D Systems and Blackline.

Diversification Opportunities for 3D Systems and Blackline

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between 3D Systems and Blackline is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding 3D Systems and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline and 3D Systems 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 3D Systems are associated (or correlated) with Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of 3D Systems i.e., 3D Systems and Blackline go up and down completely randomly.

Pair Corralation between 3D Systems and Blackline

Considering the 90-day investment horizon 3D Systems is expected to under-perform the Blackline. In addition to that, 3D Systems is 1.03 times more volatile than Blackline. It trades about -0.03 of its total potential returns per unit of risk. Blackline is currently generating about 0.01 per unit of volatility. If you would invest  6,953  in Blackline on September 5, 2022 and sell it today you would lose (224.00)  from holding Blackline or give up 3.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

3D Systems  vs.  Blackline

 Performance (%) 
       Timeline  
3D Systems 
3D Systems Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3D Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, 3D Systems exhibited solid returns over the last few months and may actually be approaching a breakup point.

3D Systems Price Channel

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

3D Systems and Blackline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 3D Systems and Blackline

The main advantage of trading using opposite 3D Systems and Blackline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3D Systems position performs unexpectedly, Blackline 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 Blackline will offset losses from the drop in Blackline's long position.
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The idea behind 3D Systems and Blackline 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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