Correlation Between Pure Storage and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Pure Storage 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 Pure Storage and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pure Storage and Automatic Data Processing, you can compare the effects of market volatilities on Pure Storage 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 Pure Storage with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and Automatic Data.
Diversification Opportunities for Pure Storage and Automatic Data
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pure and Automatic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage 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 Pure Storage 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 Pure Storage 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 Pure Storage i.e., Pure Storage and Automatic Data go up and down completely randomly.
Pair Corralation between Pure Storage and Automatic Data
Assuming the 90 days horizon Pure Storage is expected to generate 2.37 times more return on investment than Automatic Data. However, Pure Storage is 2.37 times more volatile than Automatic Data Processing. It trades about 0.06 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.09 per unit of risk. If you would invest 3,172 in Pure Storage on August 31, 2024 and sell it today you would earn a total of 1,872 from holding Pure Storage or generate 59.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pure Storage vs. Automatic Data Processing
Performance |
| Timeline |
| Pure Storage |
| Automatic Data Processing |
Pure Storage and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pure Storage and Automatic Data
The main advantage of trading using opposite Pure Storage and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pure Storage 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.| Pure Storage vs. Superior Plus Corp | Pure Storage vs. NMI Holdings | Pure Storage vs. Origin Agritech | Pure Storage vs. SIVERS SEMICONDUCTORS AB |
| Automatic Data vs. Clean Energy Fuels | Automatic Data vs. Federal Agricultural Mortgage | Automatic Data vs. Ultra Clean Holdings | Automatic Data vs. LION ONE METALS |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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