Correlation Between Strategic Investments and Adobe
Can any of the company-specific risk be diversified away by investing in both Strategic Investments 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 Strategic Investments and Adobe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Strategic Investments AS and Adobe Inc, you can compare the effects of market volatilities on Strategic Investments 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 Strategic Investments with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Strategic Investments and Adobe.
Diversification Opportunities for Strategic Investments and Adobe
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Strategic and Adobe is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Strategic Investments AS and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and Strategic Investments 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 Strategic Investments AS 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 Strategic Investments i.e., Strategic Investments and Adobe go up and down completely randomly.
Pair Corralation between Strategic Investments and Adobe
Assuming the 90 days horizon Strategic Investments is expected to generate 19.28 times less return on investment than Adobe. In addition to that, Strategic Investments is 1.66 times more volatile than Adobe Inc. It trades about 0.0 of its total potential returns per unit of risk. Adobe Inc is currently generating about 0.08 per unit of volatility. If you would invest 40,320 in Adobe Inc on August 31, 2024 and sell it today you would earn a total of 8,480 from holding Adobe Inc or generate 21.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Strategic Investments AS vs. Adobe Inc
Performance |
| Timeline |
| Strategic Investments |
| Adobe Inc |
Strategic Investments and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Strategic Investments and Adobe
The main advantage of trading using opposite Strategic Investments and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Strategic Investments 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.| Strategic Investments vs. Ameriprise Financial | Strategic Investments vs. Ares Management Corp | Strategic Investments vs. Superior Plus Corp | Strategic Investments vs. NMI Holdings |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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