Correlation Between Bentley Systems and National Instruments

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

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

Diversification Opportunities for Bentley Systems and National Instruments

0.3

Correlation Coefficient

Bentley Systems  National Instruments

Weak diversification

The 3 months correlation between Bentley and National is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bentley Systems and National Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Instruments 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 National Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Instruments has no effect on the direction of Bentley Systems i.e., Bentley Systems and National Instruments go up and down completely randomly.

Pair Corralation between Bentley Systems and National Instruments

If you would invest  4,858  in Bentley Systems on September 5, 2024 and sell it today you would earn a total of  89.00  from holding Bentley Systems or generate 1.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Bentley Systems  vs.  National Instruments

Bentley Systems

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bentley Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

National Instruments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Instruments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, National Instruments is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Bentley Systems and National Instruments

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

The idea behind Bentley Systems and National Instruments 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 Global Correlations module to find global opportunities by holding instruments from different markets.