Correlation Between Automatic Data and Moneysupermarket
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Moneysupermarket 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 Moneysupermarket 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 MoneysupermarketCom Group PLC, you can compare the effects of market volatilities on Automatic Data and Moneysupermarket 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 Moneysupermarket. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Moneysupermarket.
Diversification Opportunities for Automatic Data and Moneysupermarket
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automatic and Moneysupermarket is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and MoneysupermarketCom Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MoneysupermarketCom 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 Moneysupermarket. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MoneysupermarketCom has no effect on the direction of Automatic Data i.e., Automatic Data and Moneysupermarket go up and down completely randomly.
Pair Corralation between Automatic Data and Moneysupermarket
Assuming the 90 days trading horizon Automatic Data is expected to generate 2.26 times less return on investment than Moneysupermarket. But when comparing it to its historical volatility, Automatic Data Processing is 3.08 times less risky than Moneysupermarket. It trades about 0.37 of its potential returns per unit of risk. MoneysupermarketCom Group PLC is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 18,160 in MoneysupermarketCom Group PLC on November 28, 2024 and sell it today you would earn a total of 1,940 from holding MoneysupermarketCom Group PLC or generate 10.68% 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. MoneysupermarketCom Group PLC
Performance |
| Timeline |
| Automatic Data Processing |
| MoneysupermarketCom |
Automatic Data and Moneysupermarket Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Moneysupermarket
The main advantage of trading using opposite Automatic Data and Moneysupermarket positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Moneysupermarket 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 Moneysupermarket will offset losses from the drop in Moneysupermarket'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 |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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