Correlation Between FORWARD AIR and Adobe

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

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

Diversification Opportunities for FORWARD AIR and Adobe

0.3

Correlation Coefficient

FORWARD AIR  Adobe

Weak diversification

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

Pair Corralation between FORWARD AIR and Adobe

Assuming the 90 days horizon FORWARD AIR P is expected to generate 1.61 times more return on investment than Adobe. However, FORWARD AIR is 1.61 times more volatile than Adobe Inc. It trades about 0.07 of its potential returns per unit of risk. Adobe Inc is currently generating about -0.03 per unit of risk. If you would invest  2,780  in FORWARD AIR P on October 6, 2024 and sell it today you would earn a total of  280.00  from holding FORWARD AIR P or generate 10.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

FORWARD AIR P  vs.  Adobe Inc

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORWARD AIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 very healthy fundamental drivers, Adobe is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FORWARD AIR and Adobe

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

The idea behind FORWARD AIR P and Adobe 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.