Correlation Between Autodesk and Halma Plc
Can any of the company-specific risk be diversified away by investing in both Autodesk and Halma Plc 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 Halma Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autodesk and Halma plc, you can compare the effects of market volatilities on Autodesk and Halma Plc 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autodesk and Halma Plc.
Diversification Opportunities for Autodesk and Halma Plc
Excellent diversification
The 3 months correlation between Autodesk and Halma is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of Autodesk i.e., Autodesk and Halma Plc go up and down completely randomly.
Pair Corralation between Autodesk and Halma Plc
Given the investment horizon of 90 days Autodesk is expected to generate 0.94 times more return on investment than Halma Plc. However, Autodesk is 1.07 times less risky than Halma Plc. It trades about 0.31 of its potential returns per unit of risk. Halma plc is currently generating about 0.08 per unit of risk. If you would invest 28,652 in Autodesk on August 29, 2024 and sell it today you would earn a total of 3,144 from holding Autodesk or generate 10.97% 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. Halma plc
Performance |
| Timeline |
| Autodesk |
| Halma plc |
Autodesk and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autodesk and Halma Plc
The main advantage of trading using opposite Autodesk and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autodesk position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.The idea behind Autodesk and Halma plc 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.| Halma Plc vs. Griffon | Halma Plc vs. Brookfield Business Partners | Halma Plc vs. MDU Resources Group | Halma Plc vs. Matthews International |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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