Correlation Between Bakkt Holdings and BBAI WT

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

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

Diversification Opportunities for Bakkt Holdings and BBAI WT

0.71

Correlation Coefficient

Bakkt Holdings  BBAI WT

Poor diversification

The 3 months correlation between Bakkt and BBAI is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Holdings Warrant and BBAI WT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBAI WT and Bakkt Holdings 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 Bakkt Holdings Warrant are associated (or correlated) with BBAI WT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBAI WT has no effect on the direction of Bakkt Holdings i.e., Bakkt Holdings and BBAI WT go up and down completely randomly.

Pair Corralation between Bakkt Holdings and BBAI WT

Assuming the 90 days trading horizon Bakkt Holdings Warrant is expected to generate 2.42 times more return on investment than BBAI WT. However, Bakkt Holdings is 2.42 times more volatile than BBAI WT. It trades about 0.13 of its potential returns per unit of risk. BBAI WT is currently generating about 0.22 per unit of risk. If you would invest  9.80  in Bakkt Holdings Warrant on September 15, 2024 and sell it today you would earn a total of  30.20  from holding Bakkt Holdings Warrant or generate 308.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Bakkt Holdings Warrant  vs.  BBAI WT

Bakkt Holdings Warrant

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings Warrant are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Bakkt Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

BBAI WT

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BBAI WT are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BBAI WT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bakkt Holdings and BBAI WT

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

The idea behind Bakkt Holdings Warrant and BBAI WT 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 Transaction History module to view history of all your transactions and understand their impact on performance.