Correlation Between Bakkt Holdings and Evertec

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

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

Diversification Opportunities for Bakkt Holdings and Evertec

0.41

Correlation Coefficient

Bakkt Holdings  Evertec

Very weak diversification

The 3 months correlation between Bakkt and Evertec is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Holdings and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec 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 Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Bakkt Holdings i.e., Bakkt Holdings and Evertec go up and down completely randomly.

Pair Corralation between Bakkt Holdings and Evertec

Given the investment horizon of 90 days Bakkt Holdings is expected to under-perform the Evertec. In addition to that, Bakkt Holdings is 2.64 times more volatile than Evertec. It trades about -0.18 of its total potential returns per unit of risk. Evertec is currently generating about 0.04 per unit of volatility. If you would invest  3,600  in Evertec on November 29, 2024 and sell it today you would earn a total of  160.96  from holding Evertec or generate 4.47% return on investment over 90 days.

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

Bakkt Holdings  vs.  Evertec

Bakkt Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bakkt Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Evertec

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Evertec may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bakkt Holdings and Evertec

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

The idea behind Bakkt Holdings and Evertec 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.