Correlation Between CDK Global and Dynatrace Holdings

Can any of the company-specific risk be diversified away by investing in both CDK Global and Dynatrace Holdings 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 Dynatrace Holdings 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 Dynatrace Holdings LLC, you can compare the effects of market volatilities on CDK Global and Dynatrace Holdings 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 Dynatrace Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDK Global and Dynatrace Holdings.

Diversification Opportunities for CDK Global and Dynatrace Holdings

-0.31

Correlation Coefficient

CDK Global  Dynatrace Holdings

Very good diversification

The 3 months correlation between CDK and Dynatrace is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CDK Global Holdings and Dynatrace Holdings LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynatrace Holdings LLC 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 Dynatrace Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynatrace Holdings LLC has no effect on the direction of CDK Global i.e., CDK Global and Dynatrace Holdings go up and down completely randomly.

Pair Corralation between CDK Global and Dynatrace Holdings

If you would invest  4,616  in Dynatrace Holdings LLC on January 25, 2024 and sell it today you would earn a total of  9.00  from holding Dynatrace Holdings LLC or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.35%
Values	Daily Returns

CDK Global Holdings  vs.  Dynatrace Holdings LLC

CDK Global Holdings

Risk-Adjusted Performance

0 of 100

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.

Dynatrace Holdings LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynatrace Holdings LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CDK Global and Dynatrace Holdings

The main advantage of trading using opposite CDK Global and Dynatrace Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDK Global position performs unexpectedly, Dynatrace Holdings 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 Dynatrace Holdings will offset losses from the drop in Dynatrace Holdings' long position.

The idea behind CDK Global Holdings and Dynatrace Holdings LLC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.