Correlation Between CDK Global and Bentley SystemsInc

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Can any of the company-specific risk be diversified away by investing in both CDK Global and Bentley SystemsInc 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 CDK Global and Bentley SystemsInc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDK Global Holdings and Bentley SystemsInc, you can compare the effects of market volatilities on CDK Global and Bentley SystemsInc 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 CDK Global with a short position of Bentley SystemsInc. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDK Global and Bentley SystemsInc.

Diversification Opportunities for CDK Global and Bentley SystemsInc

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between CDK and Bentley is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CDK Global Holdings and Bentley SystemsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentley SystemsInc and CDK Global 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 CDK Global Holdings are associated (or correlated) with Bentley SystemsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentley SystemsInc has no effect on the direction of CDK Global i.e., CDK Global and Bentley SystemsInc go up and down completely randomly.

Pair Corralation between CDK Global and Bentley SystemsInc

Considering the 90-day investment horizon CDK Global Holdings is expected to generate 0.54 times more return on investment than Bentley SystemsInc. However, CDK Global Holdings is 1.87 times less risky than Bentley SystemsInc. It trades about 0.11 of its potential returns per unit of risk. Bentley SystemsInc is currently generating about 0.02 per unit of risk. If you would invest  4,912  in CDK Global Holdings on December 19, 2023 and sell it today you would earn a total of  564.00  from holding CDK Global Holdings or generate 11.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy15.32%
ValuesDaily Returns

CDK Global Holdings  vs.  Bentley SystemsInc

 Performance 
       Timeline  
CDK Global Holdings 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days CDK Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, CDK Global is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.
Bentley SystemsInc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Bentley SystemsInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Bentley SystemsInc is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CDK Global and Bentley SystemsInc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CDK Global and Bentley SystemsInc

The main advantage of trading using opposite CDK Global and Bentley SystemsInc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDK Global position performs unexpectedly, Bentley SystemsInc 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 Bentley SystemsInc will offset losses from the drop in Bentley SystemsInc's long position.
The idea behind CDK Global Holdings and Bentley SystemsInc 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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