Correlation Between Autodesk and ACV Auctions

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

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

Diversification Opportunities for Autodesk and ACV Auctions

0.4

Correlation Coefficient

Autodesk  ACV Auctions

Very weak diversification

The 3 months correlation between Autodesk and ACV is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and ACV Auctions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACV Auctions 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 ACV Auctions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACV Auctions has no effect on the direction of Autodesk i.e., Autodesk and ACV Auctions go up and down completely randomly.

Pair Corralation between Autodesk and ACV Auctions

Given the investment horizon of 90 days Autodesk is expected to generate 1.66 times less return on investment than ACV Auctions. But when comparing it to its historical volatility, Autodesk is 1.39 times less risky than ACV Auctions. It trades about 0.12 of its potential returns per unit of risk. ACV Auctions is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,871  in ACV Auctions on August 30, 2024 and sell it today you would earn a total of  400.00  from holding ACV Auctions or generate 21.38% return on investment over 90 days.

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

Autodesk  vs.  ACV Auctions

Autodesk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Autodesk disclosed solid returns over the last few months and may actually be approaching a breakup point.

ACV Auctions

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ACV Auctions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, ACV Auctions sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autodesk and ACV Auctions

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

The idea behind Autodesk and ACV Auctions 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.