Correlation Between Autodesk and Danone SA
Can any of the company-specific risk be diversified away by investing in both Autodesk and Danone SA 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 Danone SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autodesk and Danone SA, you can compare the effects of market volatilities on Autodesk and Danone SA 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 Danone SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autodesk and Danone SA.
Diversification Opportunities for Autodesk and Danone SA
Excellent diversification
The 3 months correlation between Autodesk and Danone is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Danone SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danone SA 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 Danone SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danone SA has no effect on the direction of Autodesk i.e., Autodesk and Danone SA go up and down completely randomly.
Pair Corralation between Autodesk and Danone SA
Given the investment horizon of 90 days Autodesk is expected to generate 1.62 times more return on investment than Danone SA. However, Autodesk is 1.62 times more volatile than Danone SA. It trades about 0.12 of its potential returns per unit of risk. Danone SA is currently generating about -0.03 per unit of risk. If you would invest 25,783 in Autodesk on August 31, 2024 and sell it today you would earn a total of 3,281 from holding Autodesk or generate 12.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autodesk vs. Danone SA
Performance |
| Timeline |
| Autodesk |
| Danone SA |
Autodesk and Danone SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autodesk and Danone SA
The main advantage of trading using opposite Autodesk and Danone SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autodesk position performs unexpectedly, Danone SA 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 Danone SA will offset losses from the drop in Danone SA's long position.The idea behind Autodesk and Danone SA 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.| Danone SA vs. Lifevantage | Danone SA vs. Simply Good Foods | Danone SA vs. Bellring Brands LLC | Danone SA vs. Seneca Foods Corp |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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