Correlation Between Hollywood Bowl and Autodesk

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

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

Diversification Opportunities for Hollywood Bowl and Autodesk

0.12

Correlation Coefficient

Hollywood Bowl  Autodesk

Average diversification

The 3 months correlation between Hollywood and Autodesk is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Hollywood Bowl Group and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and Hollywood Bowl 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 Hollywood Bowl Group 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 Hollywood Bowl i.e., Hollywood Bowl and Autodesk go up and down completely randomly.

Pair Corralation between Hollywood Bowl and Autodesk

Assuming the 90 days horizon Hollywood Bowl Group is expected to under-perform the Autodesk. In addition to that, Hollywood Bowl is 1.07 times more volatile than Autodesk. It trades about -0.09 of its total potential returns per unit of risk. Autodesk is currently generating about 0.06 per unit of volatility. If you would invest  27,485  in Autodesk on October 7, 2024 and sell it today you would earn a total of  1,100  from holding Autodesk or generate 4.0% return on investment over 90 days.

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

Hollywood Bowl Group  vs.  Autodesk

Hollywood Bowl Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywood Bowl Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hollywood Bowl is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Autodesk

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Autodesk reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hollywood Bowl and Autodesk

The main advantage of trading using opposite Hollywood Bowl and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hollywood Bowl 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 Hollywood Bowl Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.