Correlation Between Blackbaud and ACI Worldwide

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

By analyzing existing cross correlation between Blackbaud and ACI Worldwide, you can compare the effects of market volatilities on Blackbaud and ACI Worldwide 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 Blackbaud with a short position of ACI Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackbaud and ACI Worldwide.

Diversification Opportunities for Blackbaud and ACI Worldwide

0.04

Correlation Coefficient

Blackbaud  ACI Worldwide

Significant diversification

The 3 months correlation between Blackbaud and ACI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Blackbaud and ACI Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACI Worldwide and Blackbaud 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 Blackbaud are associated (or correlated) with ACI Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACI Worldwide has no effect on the direction of Blackbaud i.e., Blackbaud and ACI Worldwide go up and down completely randomly.

Pair Corralation between Blackbaud and ACI Worldwide

Given the investment horizon of 90 days Blackbaud is expected to under-perform the ACI Worldwide. In addition to that, Blackbaud is 1.15 times more volatile than ACI Worldwide. It trades about -0.06 of its total potential returns per unit of risk. ACI Worldwide is currently generating about 0.06 per unit of volatility. If you would invest  5,033  in ACI Worldwide on September 20, 2024 and sell it today you would earn a total of  344.00  from holding ACI Worldwide or generate 6.83% return on investment over 90 days.

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

Blackbaud  vs.  ACI Worldwide

Blackbaud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

ACI Worldwide

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ACI Worldwide are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady forward indicators, ACI Worldwide may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackbaud and ACI Worldwide

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

The idea behind Blackbaud and ACI Worldwide 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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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.