Correlation Between Vapor and Bakkt Holdings

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

Diversification Opportunities for Vapor and Bakkt Holdings

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Vapor and Bakkt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vapor Group and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings and Vapor 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 Vapor Group 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 Vapor i.e., Vapor and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Vapor and Bakkt Holdings

Given the investment horizon of 90 days Vapor Group is expected to under-perform the Bakkt Holdings. In addition to that, Vapor is 3.79 times more volatile than Bakkt Holdings. It trades about -0.23 of its total potential returns per unit of risk. Bakkt Holdings is currently generating about -0.07 per unit of volatility. If you would invest  195.00  in Bakkt Holdings on September 6, 2022 and sell it today you would lose (22.00)  from holding Bakkt Holdings or give up 11.28% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy95.0%
ValuesDaily Returns

Vapor Group  vs.  Bakkt Holdings

 Performance (%) 
       Timeline  
Vapor Group 
Vapor Performance
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Over the last 90 days Vapor Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2023. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vapor Price Channel

Bakkt Holdings 
Bakkt Performance
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Over the last 90 days Bakkt Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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

Vapor and Bakkt Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vapor and Bakkt Holdings

The main advantage of trading using opposite Vapor and Bakkt Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vapor 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 Vapor Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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