Correlation Between Automatic Data and GlobalData PLC
Can any of the company-specific risk be diversified away by investing in both Automatic Data and GlobalData PLC 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 GlobalData PLC 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 GlobalData PLC, you can compare the effects of market volatilities on Automatic Data and GlobalData PLC 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 GlobalData PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and GlobalData PLC.
Diversification Opportunities for Automatic Data and GlobalData PLC
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and GlobalData is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and GlobalData PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GlobalData PLC 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 GlobalData PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GlobalData PLC has no effect on the direction of Automatic Data i.e., Automatic Data and GlobalData PLC go up and down completely randomly.
Pair Corralation between Automatic Data and GlobalData PLC
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.73 times more return on investment than GlobalData PLC. However, Automatic Data Processing is 1.36 times less risky than GlobalData PLC. It trades about 0.2 of its potential returns per unit of risk. GlobalData PLC is currently generating about 0.0 per unit of risk. If you would invest 29,126 in Automatic Data Processing on September 1, 2024 and sell it today you would earn a total of 1,624 from holding Automatic Data Processing or generate 5.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. GlobalData PLC
Performance |
| Timeline |
| Automatic Data Processing |
| GlobalData PLC |
Automatic Data and GlobalData PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and GlobalData PLC
The main advantage of trading using opposite Automatic Data and GlobalData PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, GlobalData PLC 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 GlobalData PLC will offset losses from the drop in GlobalData PLC's long position.| Automatic Data vs. Hochschild Mining plc | Automatic Data vs. Greenroc Mining PLC | Automatic Data vs. New Residential Investment | Automatic Data vs. GoldMining |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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