Correlation Between Bentley Systems and TomTom NV

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

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

Diversification Opportunities for Bentley Systems and TomTom NV

0.32

Correlation Coefficient

Bentley Systems  TomTom NV

Weak diversification

The 3 months correlation between Bentley and TomTom is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bentley Systems and TomTom NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TomTom NV and Bentley Systems 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 Bentley Systems are associated (or correlated) with TomTom NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TomTom NV has no effect on the direction of Bentley Systems i.e., Bentley Systems and TomTom NV go up and down completely randomly.

Pair Corralation between Bentley Systems and TomTom NV

Considering the 90-day investment horizon Bentley Systems is expected to generate 0.35 times more return on investment than TomTom NV. However, Bentley Systems is 2.82 times less risky than TomTom NV. It trades about -0.1 of its potential returns per unit of risk. TomTom NV is currently generating about -0.17 per unit of risk. If you would invest  4,650  in Bentley Systems on December 2, 2024 and sell it today you would lose (260.00) from holding Bentley Systems or give up 5.59% of portfolio value over 90 days.

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

Bentley Systems  vs.  TomTom NV

Bentley Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bentley Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

TomTom NV

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bentley Systems and TomTom NV

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

The idea behind Bentley Systems and TomTom NV 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.