Correlation Between Adobe Systems and Cornerstone Strategic

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

Diversification Opportunities for Adobe Systems and Cornerstone Strategic

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between Adobe and Cornerstone is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Adobe Systems i.e., Adobe Systems and Cornerstone Strategic go up and down completely randomly.

Pair Corralation between Adobe Systems and Cornerstone Strategic

Given the investment horizon of 90 days Adobe Systems is expected to generate 2.08 times more return on investment than Cornerstone Strategic. However, Adobe Systems is 2.08 times more volatile than Cornerstone Strategic Value. It trades about 0.08 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about 0.13 per unit of risk. If you would invest  31,865  in Adobe Systems on August 28, 2022 and sell it today you would earn a total of  1,565  from holding Adobe Systems or generate 4.91% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Adobe Systems  vs.  Cornerstone Strategic Value

 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 latest abnormal performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Adobe Price Channel

Cornerstone Strategic 
Cornerstone Performance
0 of 100
Over the last 90 days Cornerstone Strategic Value has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's essential indicators remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

Cornerstone Price Channel

Adobe Systems and Cornerstone Strategic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adobe Systems and Cornerstone Strategic

The main advantage of trading using opposite Adobe Systems and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.
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The idea behind Adobe Systems and Cornerstone Strategic Value 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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