Correlation Between Bakkt Hldgs and Amdocs

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

Diversification Opportunities for Bakkt Hldgs and Amdocs

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bakkt and Amdocs is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Hldgs and Amdocs Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs Limited 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 Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs Limited has no effect on the direction of Bakkt Hldgs i.e., Bakkt Hldgs and Amdocs go up and down completely randomly.

Pair Corralation between Bakkt Hldgs and Amdocs

Given the investment horizon of 90 days Bakkt Hldgs is expected to under-perform the Amdocs. In addition to that, Bakkt Hldgs is 3.14 times more volatile than Amdocs Limited. It trades about -0.09 of its total potential returns per unit of risk. Amdocs Limited is currently generating about -0.24 per unit of volatility. If you would invest  8,564  in Amdocs Limited on July 1, 2022 and sell it today you would lose (559.00)  from holding Amdocs Limited or give up 6.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bakkt Hldgs  vs.  Amdocs Limited

 Performance (%) 
       Timeline  
Bakkt Hldgs 
Bakkt Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Hldgs are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, Bakkt Hldgs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bakkt Price Channel

Amdocs Limited 
Amdocs Performance
0 of 100
Over the last 90 days Amdocs Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Amdocs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amdocs Price Channel

Bakkt Hldgs and Amdocs Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bakkt Hldgs and Amdocs

The main advantage of trading using opposite Bakkt Hldgs and Amdocs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakkt Hldgs position performs unexpectedly, Amdocs 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 Amdocs will offset losses from the drop in Amdocs' long position.
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The idea behind Bakkt Hldgs and Amdocs Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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