Correlation Between Automatic Data and Newmont Corp
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Newmont Corp 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 Newmont Corp 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 Newmont Corp, you can compare the effects of market volatilities on Automatic Data and Newmont Corp 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 Newmont Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Newmont Corp.
Diversification Opportunities for Automatic Data and Newmont Corp
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Automatic and Newmont is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Newmont Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmont Corp 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 Newmont Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmont Corp has no effect on the direction of Automatic Data i.e., Automatic Data and Newmont Corp go up and down completely randomly.
Pair Corralation between Automatic Data and Newmont Corp
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 2.82 times more return on investment than Newmont Corp. However, Automatic Data is 2.82 times more volatile than Newmont Corp. It trades about 0.03 of its potential returns per unit of risk. Newmont Corp is currently generating about -0.01 per unit of risk. If you would invest 22,591 in Automatic Data Processing on September 24, 2024 and sell it today you would earn a total of 6,796 from holding Automatic Data Processing or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
Automatic Data Processing vs. Newmont Corp
Performance |
| Timeline |
| Automatic Data Processing |
| Newmont Corp |
Automatic Data and Newmont Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Newmont Corp
The main advantage of trading using opposite Automatic Data and Newmont Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Newmont Corp 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 Newmont Corp will offset losses from the drop in Newmont Corp's long position.| Automatic Data vs. Playtech Plc | Automatic Data vs. Metals Exploration Plc | Automatic Data vs. Trainline Plc | Automatic Data vs. Fulcrum Metals PLC |
| Newmont Corp vs. Uniper SE | Newmont Corp vs. Mulberry Group PLC | Newmont Corp vs. London Security Plc | Newmont Corp vs. Triad Group PLC |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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