Correlation Between Bakkt Hldgs and Adobe Systems

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

Diversification Opportunities for Bakkt Hldgs and Adobe Systems

0.84
  Correlation Coefficient

Very poor diversification

The 1 month correlation between Bakkt and Adobe is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Hldgs and Adobe Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Systems and Bakkt Hldgs 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 Bakkt Hldgs are associated (or correlated) with Adobe Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Systems has no effect on the direction of Bakkt Hldgs i.e., Bakkt Hldgs and Adobe Systems go up and down completely randomly.

Pair Corralation between Bakkt Hldgs and Adobe Systems

Given the investment horizon of 90 days Bakkt Hldgs is expected to generate 5.76 times more return on investment than Adobe Systems. However, Bakkt Hldgs is 5.76 times more volatile than Adobe Systems. It trades about 0.01 of its potential returns per unit of risk. Adobe Systems is currently generating about -0.04 per unit of risk. If you would invest  1,100  in Bakkt Hldgs on June 29, 2022 and sell it today you would lose (884.00)  from holding Bakkt Hldgs or give up 80.36% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthStrong
Accuracy93.76%
ValuesDaily Returns

Bakkt Hldgs  vs.  Adobe Systems

 Performance (%) 
       Timeline  
Bakkt Hldgs 
Bakkt Performance
0 of 100
Over the last 90 days Bakkt Hldgs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in October 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bakkt Price Channel

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 weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Adobe Price Channel

Bakkt Hldgs and Adobe Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bakkt Hldgs and Adobe Systems

The main advantage of trading using opposite Bakkt Hldgs and Adobe Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakkt Hldgs position performs unexpectedly, Adobe Systems 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 Adobe Systems will offset losses from the drop in Adobe Systems' long position.
Bakkt Hldgs vs. Kibush Capital Corp
The idea behind Bakkt Hldgs and Adobe Systems 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.
Adobe Systems vs. Kibush Capital Corp
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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