Correlation Between Snowflake and Autodesk

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

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

Diversification Opportunities for Snowflake and Autodesk

0.19

Correlation Coefficient

Snowflake  Autodesk

Average diversification

The 3 months correlation between Snowflake and Autodesk is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Snowflake and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and Snowflake 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 Snowflake are associated (or correlated) with Autodesk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autodesk has no effect on the direction of Snowflake i.e., Snowflake and Autodesk go up and down completely randomly.

Pair Corralation between Snowflake and Autodesk

Given the investment horizon of 90 days Snowflake is expected to under-perform the Autodesk. In addition to that, Snowflake is 1.7 times more volatile than Autodesk. It trades about -0.03 of its total potential returns per unit of risk. Autodesk is currently generating about -0.03 per unit of volatility. If you would invest  29,190  in Autodesk on November 28, 2024 and sell it today you would lose (818.00) from holding Autodesk or give up 2.8% of portfolio value over 90 days.

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

Snowflake  vs.  Autodesk

Snowflake

Risk-Adjusted Performance

Very Weak

Over the last 90 days Snowflake has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Snowflake is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Snowflake and Autodesk

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

The idea behind Snowflake and Autodesk 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.