Correlation Between S A P and Autodesk
Can any of the company-specific risk be diversified away by investing in both S A P 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 S A P and Autodesk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE ADR and Autodesk, you can compare the effects of market volatilities on S A P 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 S A P with a short position of Autodesk. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Autodesk.
Diversification Opportunities for S A P and Autodesk
Weak diversification
The 3 months correlation between SAP and Autodesk is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and S A P 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 SAP SE ADR 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 S A P i.e., S A P and Autodesk go up and down completely randomly.
Pair Corralation between S A P and Autodesk
Considering the 90-day investment horizon SAP SE ADR is expected to generate 0.84 times more return on investment than Autodesk. However, SAP SE ADR is 1.19 times less risky than Autodesk. It trades about 0.1 of its potential returns per unit of risk. Autodesk is currently generating about -0.14 per unit of risk. If you would invest 17,398 in SAP SE ADR on February 13, 2024 and sell it today you would earn a total of 1,607 from holding SAP SE ADR or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE ADR vs. Autodesk
Performance |
| Timeline |
| SAP SE ADR |
| Autodesk |
S A P and Autodesk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Autodesk
The main advantage of trading using opposite S A P and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P 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.| S A P vs. Tyler Technologies | S A P vs. Roper Technologies Common | S A P vs. Cadence Design Systems | S A P vs. PTC Inc |
| Autodesk vs. Intuit Inc | Autodesk vs. Zoom Video Communications | Autodesk vs. Snowflake | Autodesk vs. ServiceNow |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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