Correlation Between Adobe and SAP SE
Can any of the company-specific risk be diversified away by investing in both Adobe and SAP SE 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 and SAP SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adobe Inc and SAP SE, you can compare the effects of market volatilities on Adobe and SAP SE 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 with a short position of SAP SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe and SAP SE.
Diversification Opportunities for Adobe and SAP SE
Good diversification
The 3 months correlation between Adobe and SAP is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Inc and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Adobe 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 Inc are associated (or correlated) with SAP SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Adobe i.e., Adobe and SAP SE go up and down completely randomly.
Pair Corralation between Adobe and SAP SE
Assuming the 90 days trading horizon Adobe Inc is expected to under-perform the SAP SE. In addition to that, Adobe is 65.98 times more volatile than SAP SE. It trades about -0.33 of its total potential returns per unit of risk. SAP SE is currently generating about -0.24 per unit of volatility. If you would invest 501,200 in SAP SE on October 9, 2024 and sell it today you would lose (1,200) from holding SAP SE or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adobe Inc vs. SAP SE
Performance |
| Timeline |
| Adobe Inc |
| SAP SE |
Adobe and SAP SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adobe and SAP SE
The main advantage of trading using opposite Adobe and SAP SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe position performs unexpectedly, SAP SE 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 SAP SE will offset losses from the drop in SAP SE's long position.| Adobe vs. Capital One Financial | Adobe vs. Grupo Carso SAB | Adobe vs. FibraHotel | Adobe vs. Samsung Electronics Co |
| SAP SE vs. Adobe Inc | SAP SE vs. The Select Sector | SAP SE vs. Promotora y Operadora | SAP SE vs. iShares Global Timber |
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 the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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