Correlation Between Adyen NV and Adobe

Can any of the company-specific risk be diversified away by investing in both Adyen NV 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 Adyen NV and Adobe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adyen NV and Adobe Inc, you can compare the effects of market volatilities on Adyen NV 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 Adyen NV with a short position of Adobe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adyen NV and Adobe.

Diversification Opportunities for Adyen NV and Adobe

-0.05

Correlation Coefficient

Adyen NV  Adobe

Good diversification

The 3 months correlation between Adyen and Adobe is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and Adyen NV 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 Adyen NV 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 Adyen NV i.e., Adyen NV and Adobe go up and down completely randomly.

Pair Corralation between Adyen NV and Adobe

Assuming the 90 days horizon Adyen NV is expected to generate 0.88 times more return on investment than Adobe. However, Adyen NV is 1.14 times less risky than Adobe. It trades about 0.04 of its potential returns per unit of risk. Adobe Inc is currently generating about -0.05 per unit of risk. If you would invest  137,960  in Adyen NV on September 22, 2024 and sell it today you would earn a total of  6,240  from holding Adyen NV or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Adyen NV  vs.  Adobe Inc

Adyen NV

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adyen NV are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Adyen NV is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Adobe Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adobe Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Adyen NV and Adobe

The main advantage of trading using opposite Adyen NV and Adobe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adyen NV 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.

The idea behind Adyen NV and Adobe Inc 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..