Correlation Between Adobe Systems and Aci Worldwide

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

Diversification Opportunities for Adobe Systems and Aci Worldwide

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Adobe and Aci Worldwide is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems and Aci Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aci Worldwide and Adobe Systems 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 Adobe Systems 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 Adobe Systems i.e., Adobe Systems and Aci Worldwide go up and down completely randomly.

Pair Corralation between Adobe Systems and Aci Worldwide

Given the investment horizon of 90 days Adobe Systems is expected to under-perform the Aci Worldwide. But the stock apears to be less risky and, when comparing its historical volatility, Adobe Systems is 1.01 times less risky than Aci Worldwide. The stock trades about -0.27 of its potential returns per unit of risk. The Aci Worldwide is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,773  in Aci Worldwide on April 6, 2022 and sell it today you would lose (186.00)  from holding Aci Worldwide or give up 6.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Adobe Systems  vs.  Aci Worldwide

 Performance (%) 
      Timeline 
Adobe Systems 
Adobe Performance
0 of 100
Over the last 90 days Adobe Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Adobe Price Channel

Aci Worldwide 
Aci Worldwide Performance
0 of 100
Over the last 90 days Aci Worldwide has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Aci Worldwide is not utilizing all of its potentials. The new stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Structure and Payout Changes

Last Split Factor
3:1
Last Split Date
2014-07-11

Aci Worldwide Price Channel

Adobe Systems and Aci Worldwide Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Adobe Systems and Aci Worldwide

The main advantage of trading using opposite Adobe Systems and Aci Worldwide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems 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 Adobe Systems 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.
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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