Correlation Between SOS and Bakkt Holdings
Can any of the company-specific risk be diversified away by investing in both SOS and Bakkt Holdings 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 SOS and Bakkt Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOS Limited and Bakkt Holdings, you can compare the effects of market volatilities on SOS and Bakkt Holdings 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 SOS with a short position of Bakkt Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOS and Bakkt Holdings.
Diversification Opportunities for SOS and Bakkt Holdings
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SOS and Bakkt is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding SOS Limited and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings and SOS 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 SOS Limited are associated (or correlated) with Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings has no effect on the direction of SOS i.e., SOS and Bakkt Holdings go up and down completely randomly.
Pair Corralation between SOS and Bakkt Holdings
Considering the 90-day investment horizon SOS Limited is expected to under-perform the Bakkt Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SOS Limited is 1.42 times less risky than Bakkt Holdings. The stock trades about -0.01 of its potential returns per unit of risk. The Bakkt Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,200 in Bakkt Holdings on August 30, 2024 and sell it today you would lose (1,547) from holding Bakkt Holdings or give up 36.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOS Limited vs. Bakkt Holdings
Performance |
| Timeline |
| SOS Limited |
| Bakkt Holdings |
SOS and Bakkt Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOS and Bakkt Holdings
The main advantage of trading using opposite SOS and Bakkt Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOS position performs unexpectedly, Bakkt Holdings 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 Bakkt Holdings will offset losses from the drop in Bakkt Holdings' long position.The idea behind SOS Limited and Bakkt Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bakkt Holdings vs. SentinelOne | Bakkt Holdings vs. CyberArk Software | Bakkt Holdings vs. MongoDB | Bakkt Holdings vs. Appian Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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