Correlation Between Atlassian Corp and Trade Desk

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

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

Diversification Opportunities for Atlassian Corp and Trade Desk

-0.66

Correlation Coefficient

Atlassian Corp  Trade Desk

Excellent diversification

The 3 months correlation between Atlassian and Trade is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Atlassian Corp Plc and Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk and Atlassian Corp 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 Atlassian Corp Plc 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 Atlassian Corp i.e., Atlassian Corp and Trade Desk go up and down completely randomly.

Pair Corralation between Atlassian Corp and Trade Desk

Given the investment horizon of 90 days Atlassian Corp Plc is expected to under-perform the Trade Desk. In addition to that, Atlassian Corp is 1.29 times more volatile than Trade Desk. It trades about -0.16 of its total potential returns per unit of risk. Trade Desk is currently generating about -0.02 per unit of volatility. If you would invest  8,709  in Trade Desk on February 2, 2024 and sell it today you would lose (168.00) from holding Trade Desk or give up 1.93% of portfolio value over 90 days.

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

Atlassian Corp Plc  vs.  Trade Desk

Atlassian Corp Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlassian Corp Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Trade Desk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Desk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Trade Desk exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlassian Corp and Trade Desk

The main advantage of trading using opposite Atlassian Corp and Trade Desk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlassian Corp 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 Atlassian Corp Plc 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.