Correlation Between X FAB and Automatic Data
Can any of the company-specific risk be diversified away by investing in both X FAB and Automatic Data 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 X FAB and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X FAB Silicon Foundries and Automatic Data Processing, you can compare the effects of market volatilities on X FAB and Automatic Data 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 X FAB with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of X FAB and Automatic Data.
Diversification Opportunities for X FAB and Automatic Data
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between 0ROZ and Automatic is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and X FAB 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 X FAB Silicon Foundries are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of X FAB i.e., X FAB and Automatic Data go up and down completely randomly.
Pair Corralation between X FAB and Automatic Data
Assuming the 90 days trading horizon X FAB Silicon Foundries is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, X FAB Silicon Foundries is 4.42 times less risky than Automatic Data. The stock trades about -0.11 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 24,052 in Automatic Data Processing on September 1, 2024 and sell it today you would earn a total of 6,698 from holding Automatic Data Processing or generate 27.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X FAB Silicon Foundries vs. Automatic Data Processing
Performance |
| Timeline |
| X FAB Silicon |
| Automatic Data Processing |
X FAB and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X FAB and Automatic Data
The main advantage of trading using opposite X FAB and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X FAB position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| X FAB vs. Gamma Communications PLC | X FAB vs. Dalata Hotel Group | X FAB vs. Zegona Communications Plc | X FAB vs. Gaztransport et Technigaz |
| Automatic Data vs. Hochschild Mining plc | Automatic Data vs. Greenroc Mining PLC | Automatic Data vs. New Residential Investment | Automatic Data vs. GoldMining |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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