Correlation Between Bakkt Holdings and DWACW Old

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

By analyzing existing cross correlation between Bakkt Holdings and DWACW Old, you can compare the effects of market volatilities on Bakkt Holdings and DWACW Old 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 DWACW Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakkt Holdings and DWACW Old.

Diversification Opportunities for Bakkt Holdings and DWACW Old

0.13

Correlation Coefficient

Bakkt Holdings  DWACW Old

Average diversification

The 3 months correlation between Bakkt and DWACW is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Holdings and DWACW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWACW Old 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 are associated (or correlated) with DWACW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWACW Old has no effect on the direction of Bakkt Holdings i.e., Bakkt Holdings and DWACW Old go up and down completely randomly.

Pair Corralation between Bakkt Holdings and DWACW Old

If you would invest  2,940  in Bakkt Holdings on October 25, 2024 and sell it today you would earn a total of  90.00  from holding Bakkt Holdings or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Bakkt Holdings  vs.  DWACW Old

Bakkt Holdings

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Bakkt Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

DWACW Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DWACW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, DWACW Old is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Bakkt Holdings and DWACW Old

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

The idea behind Bakkt Holdings and DWACW Old 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.