Correlation Between Factset Research and Black Knight

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

Diversification Opportunities for Factset Research and Black Knight

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Factset and Black is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Factset Research Systems and Black Knight in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Knight and Factset Research 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 Factset Research Systems 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 Factset Research i.e., Factset Research and Black Knight go up and down completely randomly.

Pair Corralation between Factset Research and Black Knight

Considering the 90-day investment horizon Factset Research Systems is expected to generate 0.85 times more return on investment than Black Knight. However, Factset Research Systems is 1.18 times less risky than Black Knight. It trades about 0.04 of its potential returns per unit of risk. Black Knight is currently generating about -0.03 per unit of risk. If you would invest  34,631  in Factset Research Systems on August 28, 2022 and sell it today you would earn a total of  10,927  from holding Factset Research Systems or generate 31.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Factset Research Systems  vs.  Black Knight

 Performance (%) 
       Timeline  
Factset Research Systems 
Factset Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Factset Research Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Factset Research is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Factset Price Channel

Black Knight 
Black Performance
0 of 100
Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, Black Knight is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Black Price Channel

Factset Research and Black Knight Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Factset Research and Black Knight

The main advantage of trading using opposite Factset Research and Black Knight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Factset Research 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.
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The idea behind Factset Research Systems 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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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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