Correlation Between Alaska Energy and Adobe
Can any of the company-specific risk be diversified away by investing in both Alaska Energy and Adobe 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 Alaska Energy and Adobe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Energy Metals and Adobe Inc, you can compare the effects of market volatilities on Alaska Energy and Adobe 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 Alaska Energy with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and Adobe.
Diversification Opportunities for Alaska Energy and Adobe
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alaska and Adobe is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and Alaska Energy 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 Alaska Energy Metals are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of Alaska Energy i.e., Alaska Energy and Adobe go up and down completely randomly.
Pair Corralation between Alaska Energy and Adobe
Assuming the 90 days trading horizon Alaska Energy Metals is expected to generate 3.9 times more return on investment than Adobe. However, Alaska Energy is 3.9 times more volatile than Adobe Inc. It trades about 0.01 of its potential returns per unit of risk. Adobe Inc is currently generating about 0.0 per unit of risk. If you would invest 40.00 in Alaska Energy Metals on September 2, 2024 and sell it today you would lose (28.00) from holding Alaska Energy Metals or give up 70.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 61.29% |
| Values | Daily Returns |
Alaska Energy Metals vs. Adobe Inc
Performance |
| Timeline |
| Alaska Energy Metals |
| Adobe Inc |
Alaska Energy and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Energy and Adobe
The main advantage of trading using opposite Alaska Energy and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Energy position performs unexpectedly, Adobe 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 Adobe will offset losses from the drop in Adobe's long position.| Alaska Energy vs. Minaurum Gold | Alaska Energy vs. Dolly Varden Silver | Alaska Energy vs. Santacruz Silv | Alaska Energy vs. GoGold Resources |
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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 the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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