Correlation Between Adobe Systems and Gitlab

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

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

Diversification Opportunities for Adobe Systems and Gitlab

-0.21

Correlation Coefficient

Adobe Systems  Gitlab

Very good diversification

The 3 months correlation between Adobe and Gitlab is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and Gitlab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gitlab Inc and Adobe Systems 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 Adobe Systems Incorporated are associated (or correlated) with Gitlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gitlab Inc has no effect on the direction of Adobe Systems i.e., Adobe Systems and Gitlab go up and down completely randomly.

Pair Corralation between Adobe Systems and Gitlab

Given the investment horizon of 90 days Adobe Systems is expected to generate 2.21 times less return on investment than Gitlab. But when comparing it to its historical volatility, Adobe Systems Incorporated is 1.29 times less risky than Gitlab. It trades about 0.19 of its potential returns per unit of risk. Gitlab Inc is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  5,375  in Gitlab Inc on September 1, 2024 and sell it today you would earn a total of  1,000.00  from holding Gitlab Inc or generate 18.6% return on investment over 90 days.

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

Adobe Systems Incorporated  vs.  Gitlab Inc

Adobe Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adobe Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Gitlab Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gitlab Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal essential indicators, Gitlab sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adobe Systems and Gitlab

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

The idea behind Adobe Systems Incorporated and Gitlab 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.

Check out your portfolio center.

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.