Correlation Between EGain and Autodesk
Can any of the company-specific risk be diversified away by investing in both EGain and Autodesk 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 EGain and Autodesk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eGain and Autodesk, you can compare the effects of market volatilities on EGain and Autodesk 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 EGain with a short position of Autodesk. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGain and Autodesk.
Diversification Opportunities for EGain and Autodesk
Very good diversification
The 3 months correlation between EGain and Autodesk is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding eGain and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and EGain 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 eGain are associated (or correlated) with Autodesk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autodesk has no effect on the direction of EGain i.e., EGain and Autodesk go up and down completely randomly.
Pair Corralation between EGain and Autodesk
Given the investment horizon of 90 days EGain is expected to generate 1.04 times less return on investment than Autodesk. In addition to that, EGain is 2.82 times more volatile than Autodesk. It trades about 0.12 of its total potential returns per unit of risk. Autodesk is currently generating about 0.36 per unit of volatility. If you would invest 28,577 in Autodesk on August 25, 2024 and sell it today you would earn a total of 3,550 from holding Autodesk or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
eGain vs. Autodesk
Performance |
| Timeline |
| eGain |
| Autodesk |
EGain and Autodesk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EGain and Autodesk
The main advantage of trading using opposite EGain and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGain position performs unexpectedly, Autodesk 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 Autodesk will offset losses from the drop in Autodesk's long position.The idea behind eGain and Autodesk 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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