Correlation Between Home Depot and Autodesk

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

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

Diversification Opportunities for Home Depot and Autodesk

0.08

Correlation Coefficient

Home Depot  Autodesk

Significant diversification

The 3 months correlation between Home and Autodesk is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding The Home Depot and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and Home Depot 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 The Home Depot 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 Home Depot i.e., Home Depot and Autodesk go up and down completely randomly.

Pair Corralation between Home Depot and Autodesk

Assuming the 90 days horizon The Home Depot is expected to under-perform the Autodesk. But the stock apears to be less risky and, when comparing its historical volatility, The Home Depot is 1.41 times less risky than Autodesk. The stock trades about -0.02 of its potential returns per unit of risk. The Autodesk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  519,800  in Autodesk on April 24, 2025 and sell it today you would earn a total of  23,200  from holding Autodesk or generate 4.46% return on investment over 90 days.

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

The Home Depot  vs.  Autodesk

Home Depot

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Home Depot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Home Depot is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Home Depot and Autodesk

The main advantage of trading using opposite Home Depot and Autodesk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Depot 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 The Home Depot 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.

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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.