Correlation Between Automatic Data and GreenX Metals
Can any of the company-specific risk be diversified away by investing in both Automatic Data and GreenX 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 GreenX 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 GreenX Metals, you can compare the effects of market volatilities on Automatic Data and GreenX 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and GreenX Metals.
Diversification Opportunities for Automatic Data and GreenX Metals
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automatic and GreenX is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Automatic Data i.e., Automatic Data and GreenX Metals go up and down completely randomly.
Pair Corralation between Automatic Data and GreenX Metals
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 2.38 times more return on investment than GreenX Metals. However, Automatic Data is 2.38 times more volatile than GreenX Metals. It trades about 0.04 of its potential returns per unit of risk. GreenX Metals is currently generating about 0.01 per unit of risk. If you would invest 20,663 in Automatic Data Processing on November 28, 2024 and sell it today you would earn a total of 10,710 from holding Automatic Data Processing or generate 51.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.32% |
| Values | Daily Returns |
Automatic Data Processing vs. GreenX Metals
Performance |
| Timeline |
| Automatic Data Processing |
| GreenX Metals |
Automatic Data and GreenX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and GreenX Metals
The main advantage of trading using opposite Automatic Data and GreenX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, GreenX 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 GreenX Metals will offset losses from the drop in GreenX Metals' long position.| Automatic Data vs. CVS Health Corp | Automatic Data vs. Universal Health Services | Automatic Data vs. Axway Software SA | Automatic Data vs. Aptitude Software Group |
| GreenX Metals vs. Lindsell Train Investment | GreenX Metals vs. Fulcrum Metals PLC | GreenX Metals vs. Schroders Investment Trusts | GreenX Metals vs. Atalaya Mining |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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