Correlation Between Bakkt Holdings and StoneCo

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

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

Diversification Opportunities for Bakkt Holdings and StoneCo

-0.78

Correlation Coefficient

Bakkt Holdings  StoneCo

Pay attention - limited upside

The 3 months correlation between Bakkt and StoneCo is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Holdings and StoneCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCo 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 StoneCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCo has no effect on the direction of Bakkt Holdings i.e., Bakkt Holdings and StoneCo go up and down completely randomly.

Pair Corralation between Bakkt Holdings and StoneCo

Given the investment horizon of 90 days Bakkt Holdings is expected to under-perform the StoneCo. In addition to that, Bakkt Holdings is 2.73 times more volatile than StoneCo. It trades about -0.14 of its total potential returns per unit of risk. StoneCo is currently generating about 0.18 per unit of volatility. If you would invest  788.00  in StoneCo on December 29, 2024 and sell it today you would earn a total of  311.00  from holding StoneCo or generate 39.47% return on investment over 90 days.

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

Bakkt Holdings  vs.  StoneCo

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 April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

StoneCo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in StoneCo are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, StoneCo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bakkt Holdings and StoneCo

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

The idea behind Bakkt Holdings and StoneCo 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.