Correlation Between Wex and Blackbaud

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

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

Diversification Opportunities for Wex and Blackbaud

0.49

Correlation Coefficient

Wex  Blackbaud

Very weak diversification

The 3 months correlation between Wex and Blackbaud is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Blackbaud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackbaud and Wex 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 Wex Inc are associated (or correlated) with Blackbaud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackbaud has no effect on the direction of Wex i.e., Wex and Blackbaud go up and down completely randomly.

Pair Corralation between Wex and Blackbaud

Considering the 90-day investment horizon Wex Inc is expected to generate 0.83 times more return on investment than Blackbaud. However, Wex Inc is 1.21 times less risky than Blackbaud. It trades about 0.18 of its potential returns per unit of risk. Blackbaud is currently generating about -0.01 per unit of risk. If you would invest  13,756  in Wex Inc on May 14, 2025 and sell it today you would earn a total of  2,955  from holding Wex Inc or generate 21.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Wex Inc  vs.  Blackbaud

Wex Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wex Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Wex showed solid returns over the last few months and may actually be approaching a breakup point.

Blackbaud

Risk-Adjusted Performance

Weakest

Over the last 90 days Blackbaud has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Blackbaud is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wex and Blackbaud

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

The idea behind Wex Inc and Blackbaud 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.