Correlation Between Autodesk and Trade Desk

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

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

Diversification Opportunities for Autodesk and Trade Desk

0.74

Correlation Coefficient

Autodesk  Trade Desk

Poor diversification

The 3 months correlation between Autodesk and Trade is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk and Autodesk 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 Autodesk are associated (or correlated) with Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Autodesk i.e., Autodesk and Trade Desk go up and down completely randomly.

Pair Corralation between Autodesk and Trade Desk

Assuming the 90 days trading horizon Autodesk is expected to generate 0.36 times more return on investment than Trade Desk. However, Autodesk is 2.79 times less risky than Trade Desk. It trades about -0.13 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.21 per unit of risk. If you would invest  45,900  in Autodesk on December 27, 2024 and sell it today you would lose (7,175) from holding Autodesk or give up 15.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Autodesk  vs.  The Trade Desk

Autodesk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Autodesk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Trade Desk

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Trade Desk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Autodesk and Trade Desk

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

The idea behind Autodesk and The Trade Desk 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.