Correlation Between Autodesk and New Hope
Can any of the company-specific risk be diversified away by investing in both Autodesk and New Hope 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 New Hope into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autodesk and New Hope, you can compare the effects of market volatilities on Autodesk and New Hope 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 New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autodesk and New Hope.
Diversification Opportunities for Autodesk and New Hope
Very weak diversification
The 3 months correlation between Autodesk and New is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope 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 New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope has no effect on the direction of Autodesk i.e., Autodesk and New Hope go up and down completely randomly.
Pair Corralation between Autodesk and New Hope
Given the investment horizon of 90 days Autodesk is expected to generate 0.52 times more return on investment than New Hope. However, Autodesk is 1.93 times less risky than New Hope. It trades about 0.34 of its potential returns per unit of risk. New Hope is currently generating about -0.11 per unit of risk. If you would invest 28,652 in Autodesk on August 28, 2024 and sell it today you would earn a total of 3,287 from holding Autodesk or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autodesk vs. New Hope
Performance |
| Timeline |
| Autodesk |
| New Hope |
Autodesk and New Hope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autodesk and New Hope
The main advantage of trading using opposite Autodesk and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autodesk position performs unexpectedly, New Hope 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 New Hope will offset losses from the drop in New Hope's long position.The idea behind Autodesk and New Hope 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.| New Hope vs. Alliance Resource Partners | New Hope vs. Astera Labs, Common | New Hope vs. Autodesk | New Hope vs. Applied Blockchain |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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