Correlation Between Autodesk and Manhattan Associates

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

By analyzing existing cross correlation between Autodesk and Manhattan Associates, you can compare the effects of market volatilities on Autodesk and Manhattan Associates 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 Manhattan Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autodesk and Manhattan Associates.

Diversification Opportunities for Autodesk and Manhattan Associates

0.2

Correlation Coefficient

Autodesk  Manhattan Associates

Modest diversification

The 3 months correlation between Autodesk and Manhattan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Manhattan Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Associates 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 Manhattan Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Associates has no effect on the direction of Autodesk i.e., Autodesk and Manhattan Associates go up and down completely randomly.

Pair Corralation between Autodesk and Manhattan Associates

Given the investment horizon of 90 days Autodesk is expected to generate 0.76 times more return on investment than Manhattan Associates. However, Autodesk is 1.31 times less risky than Manhattan Associates. It trades about 0.11 of its potential returns per unit of risk. Manhattan Associates is currently generating about 0.06 per unit of risk. If you would invest  24,583  in Autodesk on September 27, 2024 and sell it today you would earn a total of  5,540  from holding Autodesk or generate 22.54% return on investment over 90 days.

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

Autodesk  vs.  Manhattan Associates

Autodesk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Autodesk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Manhattan Associates

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Associates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Manhattan Associates is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Autodesk and Manhattan Associates

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

The idea behind Autodesk and Manhattan Associates 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.