Correlation Between Autodesk and Microsoft

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

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

Diversification Opportunities for Autodesk and Microsoft

0.74

Correlation Coefficient

Autodesk  Microsoft

Poor diversification

The 3 months correlation between Autodesk and Microsoft is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Autodesk and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Autodesk i.e., Autodesk and Microsoft go up and down completely randomly.

Pair Corralation between Autodesk and Microsoft

Assuming the 90 days trading horizon Autodesk is expected to generate 5.9 times less return on investment than Microsoft. But when comparing it to its historical volatility, Autodesk is 1.0 times less risky than Microsoft. It trades about 0.05 of its potential returns per unit of risk. Microsoft is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  706,146  in Microsoft on April 21, 2025 and sell it today you would earn a total of  246,720  from holding Microsoft or generate 34.94% return on investment over 90 days.

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

Autodesk  vs.  Microsoft

Autodesk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Autodesk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Microsoft

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Microsoft showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Autodesk and Microsoft

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

The idea behind Autodesk and Microsoft 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.