Correlation Between Consolidated Communications and Autodesk

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

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

Diversification Opportunities for Consolidated Communications and Autodesk

0.9

Correlation Coefficient

Consolidated Communications  Autodesk

Almost no diversification

The 3 months correlation between Consolidated and Autodesk is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Consolidated Communications Ho and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and Consolidated Communications 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 Consolidated Communications Holdings 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 Consolidated Communications i.e., Consolidated Communications and Autodesk go up and down completely randomly.

Pair Corralation between Consolidated Communications and Autodesk

Assuming the 90 days horizon Consolidated Communications is expected to generate 1.96 times less return on investment than Autodesk. But when comparing it to its historical volatility, Consolidated Communications Holdings is 2.32 times less risky than Autodesk. It trades about 0.18 of its potential returns per unit of risk. Autodesk is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  23,250  in Autodesk on September 4, 2024 and sell it today you would earn a total of  4,345  from holding Autodesk or generate 18.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.46%
Values	Daily Returns

Consolidated Communications Ho  vs.  Autodesk

Consolidated Communications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Consolidated Communications Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Consolidated Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Autodesk

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Autodesk reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consolidated Communications and Autodesk

The main advantage of trading using opposite Consolidated Communications and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consolidated Communications 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 Consolidated Communications Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.