Correlation Between Zoom Video and Autodesk

Can any of the company-specific risk be diversified away by investing in both Zoom Video 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 Zoom Video and Autodesk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zoom Video Communications and Autodesk, you can compare the effects of market volatilities on Zoom Video 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 Zoom Video with a short position of Autodesk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zoom Video and Autodesk.

Diversification Opportunities for Zoom Video and Autodesk

0.57

Correlation Coefficient

Zoom Video  Autodesk

Very weak diversification

The 3 months correlation between Zoom and Autodesk is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Zoom Video Communications and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and Zoom Video 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 Zoom Video Communications 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 Zoom Video i.e., Zoom Video and Autodesk go up and down completely randomly.

Pair Corralation between Zoom Video and Autodesk

Allowing for the 90-day total investment horizon Zoom Video Communications is expected to generate 0.55 times more return on investment than Autodesk. However, Zoom Video Communications is 1.81 times less risky than Autodesk. It trades about -0.51 of its potential returns per unit of risk. Autodesk is currently generating about -0.46 per unit of risk. If you would invest  6,671  in Zoom Video Communications on January 24, 2024 and sell it today you would lose (717.00) from holding Zoom Video Communications or give up 10.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Zoom Video Communications  vs.  Autodesk

Zoom Video Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zoom Video Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Autodesk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Autodesk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Zoom Video and Autodesk

The main advantage of trading using opposite Zoom Video and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zoom Video 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 Zoom Video Communications 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.