Correlation Between Adobe Systems and MongoDB

Can any of the company-specific risk be diversified away by investing in both Adobe Systems and MongoDB 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 MongoDB 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 MongoDB, you can compare the effects of market volatilities on Adobe Systems and MongoDB 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 MongoDB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe Systems and MongoDB.

Diversification Opportunities for Adobe Systems and MongoDB

0.81

Correlation Coefficient

Adobe Systems  MongoDB

Very poor diversification

The 3 months correlation between Adobe and MongoDB is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and MongoDB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MongoDB 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 MongoDB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MongoDB has no effect on the direction of Adobe Systems i.e., Adobe Systems and MongoDB go up and down completely randomly.

Pair Corralation between Adobe Systems and MongoDB

Given the investment horizon of 90 days Adobe Systems Incorporated is expected to generate 0.48 times more return on investment than MongoDB. However, Adobe Systems Incorporated is 2.1 times less risky than MongoDB. It trades about 0.07 of its potential returns per unit of risk. MongoDB is currently generating about 0.02 per unit of risk. If you would invest  48,428  in Adobe Systems Incorporated on February 7, 2024 and sell it today you would earn a total of  931.00  from holding Adobe Systems Incorporated or generate 1.92% return on investment over 90 days.

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

Adobe Systems Incorporated  vs.  MongoDB

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 abnormal performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MongoDB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MongoDB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Adobe Systems and MongoDB

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

The idea behind Adobe Systems Incorporated and MongoDB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.