Correlation Between Automatic Data and Marstons PLC
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Marstons 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 Marstons 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 Marstons PLC, you can compare the effects of market volatilities on Automatic Data and Marstons 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 Marstons PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Marstons PLC.
Diversification Opportunities for Automatic Data and Marstons PLC
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and Marstons is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons 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 Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Automatic Data i.e., Automatic Data and Marstons PLC go up and down completely randomly.
Pair Corralation between Automatic Data and Marstons PLC
Assuming the 90 days trading horizon Automatic Data is expected to generate 4.37 times less return on investment than Marstons PLC. But when comparing it to its historical volatility, Automatic Data Processing is 1.96 times less risky than Marstons PLC. It trades about 0.05 of its potential returns per unit of risk. Marstons PLC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,160 in Marstons PLC on September 24, 2024 and sell it today you would earn a total of 390.00 from holding Marstons PLC or generate 9.38% 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. Marstons PLC
Performance |
| Timeline |
| Automatic Data Processing |
| Marstons PLC |
Automatic Data and Marstons PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Marstons PLC
The main advantage of trading using opposite Automatic Data and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Marstons 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 Marstons PLC will offset losses from the drop in Marstons PLC's long position.| Automatic Data vs. Playtech Plc | Automatic Data vs. Metals Exploration Plc | Automatic Data vs. Trainline Plc | Automatic Data vs. Fulcrum Metals PLC |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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