Correlation Between SiteOne Landscape and Bakkt Holdings

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

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

Diversification Opportunities for SiteOne Landscape and Bakkt Holdings

-0.15

Correlation Coefficient

SiteOne Landscape  Bakkt Holdings

Good diversification

The 3 months correlation between SiteOne and Bakkt is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SiteOne Landscape Supply and Bakkt Holdings Warrant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakkt Holdings Warrant and SiteOne Landscape 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 SiteOne Landscape Supply 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 Warrant has no effect on the direction of SiteOne Landscape i.e., SiteOne Landscape and Bakkt Holdings go up and down completely randomly.

Pair Corralation between SiteOne Landscape and Bakkt Holdings

Given the investment horizon of 90 days SiteOne Landscape Supply is expected to under-perform the Bakkt Holdings. But the stock apears to be less risky and, when comparing its historical volatility, SiteOne Landscape Supply is 17.26 times less risky than Bakkt Holdings. The stock trades about -0.06 of its potential returns per unit of risk. The Bakkt Holdings Warrant is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8.98  in Bakkt Holdings Warrant on September 22, 2024 and sell it today you would earn a total of  48.02  from holding Bakkt Holdings Warrant or generate 534.74% return on investment over 90 days.

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

SiteOne Landscape Supply  vs.  Bakkt Holdings Warrant

SiteOne Landscape Supply

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bakkt Holdings Warrant

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bakkt Holdings Warrant are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Bakkt Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SiteOne Landscape and Bakkt Holdings

The main advantage of trading using opposite SiteOne Landscape and Bakkt Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SiteOne Landscape 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 SiteOne Landscape Supply and Bakkt Holdings Warrant 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.