Correlation Between Blackline and Procore Technologies

Can any of the company-specific risk be diversified away by investing in both Blackline and Procore Technologies 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 Procore Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackline and Procore Technologies, you can compare the effects of market volatilities on Blackline and Procore Technologies 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 Procore Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackline and Procore Technologies.

Diversification Opportunities for Blackline and Procore Technologies

0.88

Correlation Coefficient

Blackline  Procore Technologies

Very poor diversification

The 3 months correlation between Blackline and Procore is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Blackline and Procore Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procore Technologies 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 Procore Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procore Technologies has no effect on the direction of Blackline i.e., Blackline and Procore Technologies go up and down completely randomly.

Pair Corralation between Blackline and Procore Technologies

Allowing for the 90-day total investment horizon Blackline is expected to generate 1.86 times less return on investment than Procore Technologies. But when comparing it to its historical volatility, Blackline is 1.14 times less risky than Procore Technologies. It trades about 0.25 of its potential returns per unit of risk. Procore Technologies is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  6,565  in Procore Technologies on September 1, 2024 and sell it today you would earn a total of  1,555  from holding Procore Technologies or generate 23.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Blackline  vs.  Procore Technologies

Blackline

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackline are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Blackline disclosed solid returns over the last few months and may actually be approaching a breakup point.

Procore Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Procore Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Procore Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackline and Procore Technologies

The main advantage of trading using opposite Blackline and Procore Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackline position performs unexpectedly, Procore Technologies 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 Procore Technologies will offset losses from the drop in Procore Technologies' long position.

The idea behind Blackline and Procore Technologies 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.

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 the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..