Correlation Between Roper Technologies, and Bentley Systems

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

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

Diversification Opportunities for Roper Technologies, and Bentley Systems

0.57

Correlation Coefficient

Roper Technologies,  Bentley Systems

Very weak diversification

The 3 months correlation between Roper and Bentley is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies, and Bentley Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentley Systems and Roper Technologies, 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 Roper Technologies, are associated (or correlated) with Bentley Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentley Systems has no effect on the direction of Roper Technologies, i.e., Roper Technologies, and Bentley Systems go up and down completely randomly.

Pair Corralation between Roper Technologies, and Bentley Systems

Considering the 90-day investment horizon Roper Technologies, is expected to under-perform the Bentley Systems. But the stock apears to be less risky and, when comparing its historical volatility, Roper Technologies, is 1.67 times less risky than Bentley Systems. The stock trades about -0.64 of its potential returns per unit of risk. The Bentley Systems is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  5,058  in Bentley Systems on October 5, 2024 and sell it today you would lose (408.00) from holding Bentley Systems or give up 8.07% of portfolio value over 90 days.

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

Roper Technologies,  vs.  Bentley Systems

Roper Technologies,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Roper Technologies, is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Bentley Systems

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Bentley Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Roper Technologies, and Bentley Systems

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

The idea behind Roper Technologies, and Bentley Systems 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.