Correlation Between Autodesk and Trade Desk

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

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

Diversification Opportunities for Autodesk and Trade Desk

0.58

Correlation Coefficient

Autodesk  Trade Desk

Very weak diversification

The 24 months correlation between Autodesk and Trade is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Autodesk i.e., Autodesk and Trade Desk go up and down completely randomly.

Pair Corralation between Autodesk and Trade Desk

Given the investment horizon of 90 days Autodesk is expected to under-perform the Trade Desk. But the stock apears to be less risky and, when comparing its historical volatility, Autodesk is 1.41 times less risky than Trade Desk. The stock trades about -0.34 of its potential returns per unit of risk. The Trade Desk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8,684  in Trade Desk on February 9, 2024 and sell it today you would lose (82.00) from holding Trade Desk or give up 0.94% of portfolio value over 90 days.

Time Period	24 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Autodesk  vs.  Trade Desk

Autodesk

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Trade Desk

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Desk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Trade Desk may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Autodesk and Trade Desk

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

The idea behind Autodesk and Trade Desk 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.