Correlation Between Bakkt Holdings and Joint Stock

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

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

Diversification Opportunities for Bakkt Holdings and Joint Stock

-0.12

Correlation Coefficient

Bakkt Holdings  Joint Stock

Good diversification

The 3 months correlation between Bakkt and Joint is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bakkt Holdings and Joint Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Stock 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 Joint Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Stock has no effect on the direction of Bakkt Holdings i.e., Bakkt Holdings and Joint Stock go up and down completely randomly.

Pair Corralation between Bakkt Holdings and Joint Stock

Given the investment horizon of 90 days Bakkt Holdings is expected to generate 12.82 times more return on investment than Joint Stock. However, Bakkt Holdings is 12.82 times more volatile than Joint Stock. It trades about 0.16 of its potential returns per unit of risk. Joint Stock is currently generating about -0.09 per unit of risk. If you would invest  1,077  in Bakkt Holdings on September 25, 2024 and sell it today you would earn a total of  1,837  from holding Bakkt Holdings or generate 170.57% return on investment over 90 days.

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

Bakkt Holdings  vs.  Joint Stock

Bakkt Holdings

Risk-Adjusted Performance

11 of 100

Good

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.

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Joint Stock is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bakkt Holdings and Joint Stock

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

The idea behind Bakkt Holdings and Joint Stock 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.