Correlation Between Automatic Data and Haleon PLC
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Haleon 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 Haleon 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 Haleon PLC, you can compare the effects of market volatilities on Automatic Data and Haleon 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 Haleon PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Haleon PLC.
Diversification Opportunities for Automatic Data and Haleon PLC
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automatic and Haleon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Haleon PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haleon 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 Haleon PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haleon PLC has no effect on the direction of Automatic Data i.e., Automatic Data and Haleon PLC go up and down completely randomly.
Pair Corralation between Automatic Data and Haleon PLC
Assuming the 90 days trading horizon Automatic Data is expected to generate 1.17 times less return on investment than Haleon PLC. But when comparing it to its historical volatility, Automatic Data Processing is 1.87 times less risky than Haleon PLC. It trades about 0.37 of its potential returns per unit of risk. Haleon PLC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 37,510 in Haleon PLC on November 28, 2024 and sell it today you would earn a total of 2,040 from holding Haleon PLC or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Haleon PLC
Performance |
| Timeline |
| Automatic Data Processing |
| Haleon PLC |
Automatic Data and Haleon PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Haleon PLC
The main advantage of trading using opposite Automatic Data and Haleon PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Haleon 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 Haleon PLC will offset losses from the drop in Haleon PLC's 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 |
| Haleon PLC vs. Impax Environmental Markets | Haleon PLC vs. Fair Oaks Income | Haleon PLC vs. Foresight Environmental Infrastructure | Haleon PLC vs. Norwegian Air Shuttle |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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