Correlation Between Autodesk and Dassault Systmes

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

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

Diversification Opportunities for Autodesk and Dassault Systmes

-0.51

Correlation Coefficient

Autodesk  Dassault Systmes

Excellent diversification

The 3 months correlation between Autodesk and Dassault is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Dassault Systmes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systmes 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 Dassault Systmes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systmes has no effect on the direction of Autodesk i.e., Autodesk and Dassault Systmes go up and down completely randomly.

Pair Corralation between Autodesk and Dassault Systmes

Assuming the 90 days horizon Autodesk is expected to under-perform the Dassault Systmes. In addition to that, Autodesk is 1.3 times more volatile than Dassault Systmes SE. It trades about -0.16 of its total potential returns per unit of risk. Dassault Systmes SE is currently generating about -0.03 per unit of volatility. If you would invest  3,220  in Dassault Systmes SE on September 23, 2024 and sell it today you would lose (40.00) from holding Dassault Systmes SE or give up 1.24% of portfolio value over 90 days.

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

Autodesk  vs.  Dassault Systmes SE

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.

Dassault Systmes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dassault Systmes SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Autodesk and Dassault Systmes

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

The idea behind Autodesk and Dassault Systmes SE 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.