Correlation Between Automatic Data and J Sainsbury
Can any of the company-specific risk be diversified away by investing in both Automatic Data and J Sainsbury 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 J Sainsbury 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 J Sainsbury PLC, you can compare the effects of market volatilities on Automatic Data and J Sainsbury 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 J Sainsbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and J Sainsbury.
Diversification Opportunities for Automatic Data and J Sainsbury
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Automatic and SBRY is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and J Sainsbury PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Sainsbury 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 J Sainsbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Sainsbury PLC has no effect on the direction of Automatic Data i.e., Automatic Data and J Sainsbury go up and down completely randomly.
Pair Corralation between Automatic Data and J Sainsbury
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 8.32 times more return on investment than J Sainsbury. However, Automatic Data is 8.32 times more volatile than J Sainsbury PLC. It trades about 0.06 of its potential returns per unit of risk. J Sainsbury PLC is currently generating about 0.02 per unit of risk. If you would invest 24,237 in Automatic Data Processing on September 3, 2024 and sell it today you would earn a total of 6,513 from holding Automatic Data Processing or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.33% |
| Values | Daily Returns |
Automatic Data Processing vs. J Sainsbury PLC
Performance |
| Timeline |
| Automatic Data Processing |
| J Sainsbury PLC |
Automatic Data and J Sainsbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and J Sainsbury
The main advantage of trading using opposite Automatic Data and J Sainsbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, J Sainsbury 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 J Sainsbury will offset losses from the drop in J Sainsbury's long position.| Automatic Data vs. Bell Food Group | Automatic Data vs. Allianz Technology Trust | Automatic Data vs. L3Harris Technologies | Automatic Data vs. Celebrus Technologies plc |
| J Sainsbury vs. Automatic Data Processing | J Sainsbury vs. Pets at Home | J Sainsbury vs. BE Semiconductor Industries | J Sainsbury vs. Samsung Electronics Co |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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