Correlation Between Automatic Data and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Golden Metal 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 Golden Metal 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 Golden Metal Resources, you can compare the effects of market volatilities on Automatic Data and Golden Metal 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 Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Golden Metal.
Diversification Opportunities for Automatic Data and Golden Metal
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Automatic and Golden is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources 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 Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Automatic Data i.e., Automatic Data and Golden Metal go up and down completely randomly.
Pair Corralation between Automatic Data and Golden Metal
Assuming the 90 days trading horizon Automatic Data is expected to generate 13.87 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Automatic Data Processing is 7.8 times less risky than Golden Metal. It trades about 0.03 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9.00 in Golden Metal Resources on October 11, 2024 and sell it today you would earn a total of 3,141 from holding Golden Metal Resources or generate 34900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 85.86% |
| Values | Daily Returns |
Automatic Data Processing vs. Golden Metal Resources
Performance |
| Timeline |
| Automatic Data Processing |
| Golden Metal Resources |
Automatic Data and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Golden Metal
The main advantage of trading using opposite Automatic Data and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Automatic Data vs. Dalata Hotel Group | Automatic Data vs. Coeur Mining | Automatic Data vs. Caledonia Investments | Automatic Data vs. First Class Metals |
| Golden Metal vs. Automatic Data Processing | Golden Metal vs. Alliance Data Systems | Golden Metal vs. Aeorema Communications Plc | Golden Metal vs. Spirent Communications 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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