Correlation Between Automatic Data and European Metals
Can any of the company-specific risk be diversified away by investing in both Automatic Data and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Automatic Data and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and European Metals.
Diversification Opportunities for Automatic Data and European Metals
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Automatic and European is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Automatic Data i.e., Automatic Data and European Metals go up and down completely randomly.
Pair Corralation between Automatic Data and European Metals
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 1.67 times more return on investment than European Metals. However, Automatic Data is 1.67 times more volatile than European Metals Holdings. It trades about 0.03 of its potential returns per unit of risk. European Metals Holdings is currently generating about -0.07 per unit of risk. If you would invest 21,541 in Automatic Data Processing on October 26, 2024 and sell it today you would earn a total of 8,244 from holding Automatic Data Processing or generate 38.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Automatic Data Processing vs. European Metals Holdings
Performance |
| Timeline |
| Automatic Data Processing |
| European Metals Holdings |
Automatic Data and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and European Metals
The main advantage of trading using opposite Automatic Data and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Automatic Data vs. Travel Leisure Co | Automatic Data vs. LBG Media PLC | Automatic Data vs. Universal Display Corp | Automatic Data vs. Molson Coors Beverage |
| European Metals vs. Atalaya Mining | European Metals vs. Software Circle plc | European Metals vs. Coeur Mining | European Metals vs. Flow Traders NV |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |