Correlation Between Autodesk and Workday

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

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

Diversification Opportunities for Autodesk and Workday

0.63

Correlation Coefficient

Autodesk  Workday

Poor diversification

The 3 months correlation between Autodesk and Workday is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday 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 Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Autodesk i.e., Autodesk and Workday go up and down completely randomly.

Pair Corralation between Autodesk and Workday

Given the investment horizon of 90 days Autodesk is expected to under-perform the Workday. But the stock apears to be less risky and, when comparing its historical volatility, Autodesk is 1.29 times less risky than Workday. The stock trades about -0.14 of its potential returns per unit of risk. The Workday is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  26,420  in Workday on November 28, 2024 and sell it today you would lose (898.00) from holding Workday or give up 3.4% of portfolio value over 90 days.

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

Autodesk  vs.  Workday

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 quite persistent basic indicators, Autodesk is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Workday

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Workday is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Autodesk and Workday

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

The idea behind Autodesk and Workday 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.