Correlation Between Dassault Systmes and Intuit

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

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

Diversification Opportunities for Dassault Systmes and Intuit

-0.28

Correlation Coefficient

Dassault Systmes  Intuit

Very good diversification

The 3 months correlation between Dassault and Intuit is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systmes SE and Intuit Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuit Inc and Dassault Systmes 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 Dassault Systmes SE are associated (or correlated) with Intuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuit Inc has no effect on the direction of Dassault Systmes i.e., Dassault Systmes and Intuit go up and down completely randomly.

Pair Corralation between Dassault Systmes and Intuit

Assuming the 90 days horizon Dassault Systmes SE is expected to generate 1.04 times more return on investment than Intuit. However, Dassault Systmes is 1.04 times more volatile than Intuit Inc. It trades about -0.01 of its potential returns per unit of risk. Intuit Inc is currently generating about -0.05 per unit of risk. If you would invest  3,200  in Dassault Systmes SE on September 22, 2024 and sell it today you would lose (20.00) from holding Dassault Systmes SE or give up 0.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Dassault Systmes SE  vs.  Intuit Inc

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.

Intuit Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Intuit may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dassault Systmes and Intuit

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

The idea behind Dassault Systmes SE and Intuit Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.