Correlation Between Adobe Systems and Seagate Technology
Can any of the company-specific risk be diversified away by investing in both Adobe Systems and Seagate Technology 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 Systems and Seagate Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adobe Systems Incorporated and Seagate Technology PLC, you can compare the effects of market volatilities on Adobe Systems and Seagate Technology 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 Systems with a short position of Seagate Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe Systems and Seagate Technology.
Diversification Opportunities for Adobe Systems and Seagate Technology
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adobe and Seagate is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and Seagate Technology PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology PLC and Adobe Systems 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 Systems Incorporated are associated (or correlated) with Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology PLC has no effect on the direction of Adobe Systems i.e., Adobe Systems and Seagate Technology go up and down completely randomly.
Pair Corralation between Adobe Systems and Seagate Technology
Given the investment horizon of 90 days Adobe Systems Incorporated is expected to generate 1.4 times more return on investment than Seagate Technology. However, Adobe Systems is 1.4 times more volatile than Seagate Technology PLC. It trades about 0.1 of its potential returns per unit of risk. Seagate Technology PLC is currently generating about -0.11 per unit of risk. If you would invest 48,503 in Adobe Systems Incorporated on August 24, 2024 and sell it today you would earn a total of 1,935 from holding Adobe Systems Incorporated or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adobe Systems Incorporated vs. Seagate Technology PLC
Performance |
| Timeline |
| Adobe Systems |
| Seagate Technology PLC |
Adobe Systems and Seagate Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adobe Systems and Seagate Technology
The main advantage of trading using opposite Adobe Systems and Seagate Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems position performs unexpectedly, Seagate Technology 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 Seagate Technology will offset losses from the drop in Seagate Technology's long position.| Adobe Systems vs. Crowdstrike Holdings | Adobe Systems vs. Palantir Technologies | Adobe Systems vs. Zscaler | Adobe Systems vs. Palo Alto Networks |
| Seagate Technology vs. NetApp Inc | Seagate Technology vs. Dell Technologies | Seagate Technology vs. Pure Storage | Seagate Technology vs. HP Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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