Correlation Between PagSeguro Digital and Adobe
Can any of the company-specific risk be diversified away by investing in both PagSeguro Digital 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 PagSeguro Digital and Adobe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PagSeguro Digital and Adobe Inc, you can compare the effects of market volatilities on PagSeguro Digital 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 PagSeguro Digital with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of PagSeguro Digital and Adobe.
Diversification Opportunities for PagSeguro Digital and Adobe
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PagSeguro and Adobe is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PagSeguro Digital and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and PagSeguro Digital 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 PagSeguro Digital 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 PagSeguro Digital i.e., PagSeguro Digital and Adobe go up and down completely randomly.
Pair Corralation between PagSeguro Digital and Adobe
Assuming the 90 days trading horizon PagSeguro Digital is expected to generate 1.54 times less return on investment than Adobe. In addition to that, PagSeguro Digital is 1.11 times more volatile than Adobe Inc. It trades about 0.01 of its total potential returns per unit of risk. Adobe Inc is currently generating about 0.01 per unit of volatility. If you would invest 6,017 in Adobe Inc on August 26, 2024 and sell it today you would lose (57.00) from holding Adobe Inc or give up 0.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PagSeguro Digital vs. Adobe Inc
Performance |
| Timeline |
| PagSeguro Digital |
| Adobe Inc |
PagSeguro Digital and Adobe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PagSeguro Digital and Adobe
The main advantage of trading using opposite PagSeguro Digital and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PagSeguro Digital 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.| PagSeguro Digital vs. Tyson Foods | PagSeguro Digital vs. Raytheon Technologies | PagSeguro Digital vs. Broadcom | PagSeguro Digital vs. New Oriental Education |
| Adobe vs. Zoom Video Communications | Adobe vs. United Airlines Holdings | Adobe vs. GP Investments | Adobe vs. Southwest Airlines Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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