Correlation Between Automatic Data and Adidas AG
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Adidas AG 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 Adidas AG 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 adidas AG, you can compare the effects of market volatilities on Automatic Data and Adidas AG 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 Adidas AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Adidas AG.
Diversification Opportunities for Automatic Data and Adidas AG
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and Adidas is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and adidas AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on adidas AG 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 Adidas AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of adidas AG has no effect on the direction of Automatic Data i.e., Automatic Data and Adidas AG go up and down completely randomly.
Pair Corralation between Automatic Data and Adidas AG
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.71 times more return on investment than Adidas AG. However, Automatic Data Processing is 1.41 times less risky than Adidas AG. It trades about 0.16 of its potential returns per unit of risk. adidas AG is currently generating about 0.01 per unit of risk. If you would invest 22,119 in Automatic Data Processing on September 3, 2024 and sell it today you would earn a total of 6,991 from holding Automatic Data Processing or generate 31.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. adidas AG
Performance |
| Timeline |
| Automatic Data Processing |
| adidas AG |
Automatic Data and Adidas AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Adidas AG
The main advantage of trading using opposite Automatic Data and Adidas AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Adidas AG 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 Adidas AG will offset losses from the drop in Adidas AG's long position.| Automatic Data vs. DFS Furniture PLC | Automatic Data vs. KOOL2PLAY SA ZY | Automatic Data vs. ITALIAN WINE BRANDS | Automatic Data vs. ePlay Digital |
| Adidas AG vs. Deckers Outdoor | Adidas AG vs. PUMA SE | Adidas AG vs. Superior Plus Corp | Adidas AG vs. NMI Holdings |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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