Correlation Between Autodesk and FNB
Can any of the company-specific risk be diversified away by investing in both Autodesk and FNB 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 Autodesk and FNB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autodesk and FNB Inc, you can compare the effects of market volatilities on Autodesk and FNB 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 Autodesk with a short position of FNB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autodesk and FNB.
Diversification Opportunities for Autodesk and FNB
Poor diversification
The 3 months correlation between Autodesk and FNB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and FNB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNB Inc and Autodesk 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 Autodesk are associated (or correlated) with FNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNB Inc has no effect on the direction of Autodesk i.e., Autodesk and FNB go up and down completely randomly.
Pair Corralation between Autodesk and FNB
Given the investment horizon of 90 days Autodesk is expected to generate 1.9 times more return on investment than FNB. However, Autodesk is 1.9 times more volatile than FNB Inc. It trades about 0.36 of its potential returns per unit of risk. FNB Inc is currently generating about 0.21 per unit of risk. If you would invest 28,604 in Autodesk on August 26, 2024 and sell it today you would earn a total of 3,523 from holding Autodesk or generate 12.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autodesk vs. FNB Inc
Performance |
| Timeline |
| Autodesk |
| FNB Inc |
Autodesk and FNB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autodesk and FNB
The main advantage of trading using opposite Autodesk and FNB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autodesk position performs unexpectedly, FNB 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 FNB will offset losses from the drop in FNB's long position.The idea behind Autodesk and FNB 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.| FNB vs. Standard Bank Group | FNB vs. PSB Holdings | FNB vs. United Overseas Bank | FNB vs. Turkiye Garanti Bankasi |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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