Correlation Between Adobe and Wix
Can any of the company-specific risk be diversified away by investing in both Adobe and Wix 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 Wix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adobe Inc and Wix, you can compare the effects of market volatilities on Adobe and Wix 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 Wix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe and Wix.
Diversification Opportunities for Adobe and Wix
Modest diversification
The 3 months correlation between Adobe and Wix is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Inc and Wix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wix 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 Wix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wix has no effect on the direction of Adobe i.e., Adobe and Wix go up and down completely randomly.
Pair Corralation between Adobe and Wix
Assuming the 90 days trading horizon Adobe is expected to generate 2.06 times less return on investment than Wix. But when comparing it to its historical volatility, Adobe Inc is 1.36 times less risky than Wix. It trades about 0.06 of its potential returns per unit of risk. Wix is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,460 in Wix on September 3, 2024 and sell it today you would earn a total of 3,048 from holding Wix or generate 208.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Adobe Inc vs. Wix
Performance |
| Timeline |
| Adobe Inc |
| Wix |
Adobe and Wix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adobe and Wix
The main advantage of trading using opposite Adobe and Wix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe position performs unexpectedly, Wix 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 Wix will offset losses from the drop in Wix's long position.| Adobe vs. Autohome | Adobe vs. Charter Communications | Adobe vs. Lupatech SA | Adobe vs. Extra Space Storage |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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