Correlation Between Automatic Data and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Planet Fitness 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 Automatic Data and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Planet Fitness Cl, you can compare the effects of market volatilities on Automatic Data and Planet Fitness 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 Automatic Data with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Planet Fitness.
Diversification Opportunities for Automatic Data and Planet Fitness
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and Planet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Planet Fitness Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness Cl and Automatic Data 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 Automatic Data Processing are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness Cl has no effect on the direction of Automatic Data i.e., Automatic Data and Planet Fitness go up and down completely randomly.
Pair Corralation between Automatic Data and Planet Fitness
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 2.96 times more return on investment than Planet Fitness. However, Automatic Data is 2.96 times more volatile than Planet Fitness Cl. It trades about 0.04 of its potential returns per unit of risk. Planet Fitness Cl is currently generating about 0.06 per unit of risk. If you would invest 21,358 in Automatic Data Processing on August 28, 2024 and sell it today you would earn a total of 9,026 from holding Automatic Data Processing or generate 42.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.18% |
| Values | Daily Returns |
Automatic Data Processing vs. Planet Fitness Cl
Performance |
| Timeline |
| Automatic Data Processing |
| Planet Fitness Cl |
Automatic Data and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Planet Fitness
The main advantage of trading using opposite Automatic Data and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Planet Fitness 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 Planet Fitness will offset losses from the drop in Planet Fitness' long position.| Automatic Data vs. Associated British Foods | Automatic Data vs. Ebro Foods | Automatic Data vs. Extra Space Storage | Automatic Data vs. InterContinental Hotels Group |
| Planet Fitness vs. Samsung Electronics Co | Planet Fitness vs. Samsung Electronics Co | Planet Fitness vs. Hyundai Motor | Planet Fitness vs. Toyota Motor Corp |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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