Correlation Between Rexel SA and Blackline

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

Diversification Opportunities for Rexel SA and Blackline

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Rexel and Blackline is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Rexel SA ADR and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline and Rexel SA 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 Rexel SA ADR 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 Rexel SA i.e., Rexel SA and Blackline go up and down completely randomly.

Pair Corralation between Rexel SA and Blackline

Assuming the 90 days horizon Rexel SA ADR is expected to generate 0.63 times more return on investment than Blackline. However, Rexel SA ADR is 1.58 times less risky than Blackline. It trades about 0.14 of its potential returns per unit of risk. Blackline is currently generating about 0.07 per unit of risk. If you would invest  1,552  in Rexel SA ADR on September 3, 2022 and sell it today you would earn a total of  298.00  from holding Rexel SA ADR or generate 19.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.73%
ValuesDaily Returns

Rexel SA ADR  vs.  Blackline

 Performance (%) 
       Timeline  
Rexel SA ADR 
Rexel Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Rexel SA ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Rexel SA showed solid returns over the last few months and may actually be approaching a breakup point.

Rexel 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 unsteady essential indicators, Blackline may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Blackline Price Channel

Rexel SA and Blackline Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Rexel SA and Blackline

The main advantage of trading using opposite Rexel SA and Blackline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rexel SA 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 Rexel SA ADR 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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