Correlation Between S A P and Bumble
Can any of the company-specific risk be diversified away by investing in both S A P and Bumble 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 S A P and Bumble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE ADR and Bumble Inc, you can compare the effects of market volatilities on S A P and Bumble 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 S A P with a short position of Bumble. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Bumble.
Diversification Opportunities for S A P and Bumble
Significant diversification
The 3 months correlation between SAP and Bumble is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Bumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumble Inc and S A P 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 SAP SE ADR are associated (or correlated) with Bumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumble Inc has no effect on the direction of S A P i.e., S A P and Bumble go up and down completely randomly.
Pair Corralation between S A P and Bumble
Considering the 90-day investment horizon SAP SE ADR is expected to generate 0.55 times more return on investment than Bumble. However, SAP SE ADR is 1.81 times less risky than Bumble. It trades about 0.31 of its potential returns per unit of risk. Bumble Inc is currently generating about -0.05 per unit of risk. If you would invest 24,886 in SAP SE ADR on October 23, 2024 and sell it today you would earn a total of 2,043 from holding SAP SE ADR or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE ADR vs. Bumble Inc
Performance |
| Timeline |
| SAP SE ADR |
| Bumble Inc |
S A P and Bumble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Bumble
The main advantage of trading using opposite S A P and Bumble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Bumble 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 Bumble will offset losses from the drop in Bumble's long position.| S A P vs. Tyler Technologies | S A P vs. Roper Technologies, | S A P vs. Cadence Design Systems | S A P vs. PTC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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