Correlation Between Swedish Match and Bakkt Holdings

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

Diversification Opportunities for Swedish Match and Bakkt Holdings

-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Swedish and Bakkt is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Swedish Match Ab and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings and Swedish Match 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 Swedish Match Ab are associated (or correlated) with Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings has no effect on the direction of Swedish Match i.e., Swedish Match and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Swedish Match and Bakkt Holdings

Assuming the 90 days horizon Swedish Match Ab is expected to generate 0.19 times more return on investment than Bakkt Holdings. However, Swedish Match Ab is 5.24 times less risky than Bakkt Holdings. It trades about 0.02 of its potential returns per unit of risk. Bakkt Holdings is currently generating about -0.08 per unit of risk. If you would invest  1,086  in Swedish Match Ab on September 11, 2022 and sell it today you would earn a total of  3.00  from holding Swedish Match Ab or generate 0.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Swedish Match Ab  vs.  Bakkt Holdings

 Performance (%) 
       Timeline  
Swedish Match Ab 
Swedish Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Swedish Match Ab are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Swedish Match is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Swedish Price Channel

Bakkt Holdings 
Bakkt Performance
0 of 100
Over the last 90 days Bakkt Holdings 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 January 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Bakkt Price Channel

Swedish Match and Bakkt Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Swedish Match and Bakkt Holdings

The main advantage of trading using opposite Swedish Match and Bakkt Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swedish Match position performs unexpectedly, Bakkt Holdings 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 Bakkt Holdings will offset losses from the drop in Bakkt Holdings' long position.
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The idea behind Swedish Match Ab and Bakkt Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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