Correlation Between Adobe and Intuit

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

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

Diversification Opportunities for Adobe and Intuit

0.3

Correlation Coefficient

Adobe  Intuit

Weak diversification

The 3 months correlation between Adobe and Intuit is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Inc and Intuit Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuit Inc and Adobe 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 Adobe Inc are associated (or correlated) with Intuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuit Inc has no effect on the direction of Adobe i.e., Adobe and Intuit go up and down completely randomly.

Pair Corralation between Adobe and Intuit

Assuming the 90 days trading horizon Adobe Inc is expected to under-perform the Intuit. In addition to that, Adobe is 1.25 times more volatile than Intuit Inc. It trades about -0.03 of its total potential returns per unit of risk. Intuit Inc is currently generating about 0.04 per unit of volatility. If you would invest  1,194,209  in Intuit Inc on September 29, 2024 and sell it today you would earn a total of  104,098  from holding Intuit Inc or generate 8.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Adobe Inc  vs.  Intuit Inc

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. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Intuit Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Intuit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Adobe and Intuit

The main advantage of trading using opposite Adobe and Intuit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe position performs unexpectedly, Intuit 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 Intuit will offset losses from the drop in Intuit's long position.

The idea behind Adobe Inc and Intuit 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.