Correlation Between Phunware and Bakkt Holdings

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

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

Diversification Opportunities for Phunware and Bakkt Holdings

-0.08

Correlation Coefficient

Phunware  Bakkt Holdings

Good diversification

The 3 months correlation between Phunware and Bakkt is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Phunware and Bakkt Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings and Phunware 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 Phunware are associated (or correlated) with Bakkt Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakkt Holdings has no effect on the direction of Phunware i.e., Phunware and Bakkt Holdings go up and down completely randomly.

Pair Corralation between Phunware and Bakkt Holdings

Given the investment horizon of 90 days Phunware is expected to generate 1.88 times more return on investment than Bakkt Holdings. However, Phunware is 1.88 times more volatile than Bakkt Holdings. It trades about 0.02 of its potential returns per unit of risk. Bakkt Holdings is currently generating about 0.04 per unit of risk. If you would invest  4,700  in Phunware on September 5, 2024 and sell it today you would lose (4,242) from holding Phunware or give up 90.26% of portfolio value over 90 days.

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

Phunware  vs.  Bakkt Holdings

Phunware

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Phunware are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Phunware displayed solid returns over the last few months and may actually be approaching a breakup point.

Bakkt Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings are ranked lower than 8 (%) 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.

Pair Trading with Phunware and Bakkt Holdings

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

The idea behind Phunware and Bakkt Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.