Correlation Between GoldMining and Automatic Data
Can any of the company-specific risk be diversified away by investing in both GoldMining 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 GoldMining and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GoldMining and Automatic Data Processing, you can compare the effects of market volatilities on GoldMining 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 GoldMining with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of GoldMining and Automatic Data.
Diversification Opportunities for GoldMining and Automatic Data
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GoldMining and Automatic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding GoldMining 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 GoldMining 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 GoldMining 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 GoldMining i.e., GoldMining and Automatic Data go up and down completely randomly.
Pair Corralation between GoldMining and Automatic Data
Assuming the 90 days trading horizon GoldMining is expected to generate 6.71 times less return on investment than Automatic Data. In addition to that, GoldMining is 2.31 times more volatile than Automatic Data Processing. It trades about 0.01 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.21 per unit of volatility. If you would invest 29,085 in Automatic Data Processing on September 3, 2024 and sell it today you would earn a total of 1,665 from holding Automatic Data Processing or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 61.9% |
| Values | Daily Returns |
GoldMining vs. Automatic Data Processing
Performance |
| Timeline |
| GoldMining |
| Automatic Data Processing |
GoldMining and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GoldMining and Automatic Data
The main advantage of trading using opposite GoldMining and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GoldMining 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.| GoldMining vs. Catalyst Media Group | GoldMining vs. CATLIN GROUP | GoldMining vs. RTW Venture Fund | GoldMining vs. Secure Property Development |
| Automatic Data vs. Bell Food Group | Automatic Data vs. Allianz Technology Trust | Automatic Data vs. L3Harris Technologies | Automatic Data vs. Celebrus Technologies plc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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