Correlation Between Intuit and SAP SE

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

Diversification Opportunities for Intuit and SAP SE

0.86
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Intuit and SAP is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Intuit Inc and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Intuit 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 Intuit Inc are associated (or correlated) with SAP SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Intuit i.e., Intuit and SAP SE go up and down completely randomly.

Pair Corralation between Intuit and SAP SE

Given the investment horizon of 90 days Intuit is expected to generate 1.12 times less return on investment than SAP SE. In addition to that, Intuit is 1.15 times more volatile than SAP SE. It trades about 0.09 of its total potential returns per unit of risk. SAP SE is currently generating about 0.11 per unit of volatility. If you would invest  10,693  in SAP SE on December 20, 2023 and sell it today you would earn a total of  8,055  from holding SAP SE or generate 75.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Intuit Inc  vs.  SAP SE

 Performance 
       Timeline  
Intuit Inc 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Intuit is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
SAP SE 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, SAP SE reported solid returns over the last few months and may actually be approaching a breakup point.

Intuit and SAP SE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intuit and SAP SE

The main advantage of trading using opposite Intuit and SAP SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intuit position performs unexpectedly, SAP SE 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 SAP SE will offset losses from the drop in SAP SE's long position.
The idea behind Intuit Inc and SAP SE 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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