Correlation Between Automatic Data and Agnico Eagle
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Agnico Eagle 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 Agnico Eagle 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 Agnico Eagle Mines, you can compare the effects of market volatilities on Automatic Data and Agnico Eagle 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 Agnico Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Agnico Eagle.
Diversification Opportunities for Automatic Data and Agnico Eagle
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automatic and Agnico is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Agnico Eagle Mines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agnico Eagle Mines 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 Agnico Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agnico Eagle Mines has no effect on the direction of Automatic Data i.e., Automatic Data and Agnico Eagle go up and down completely randomly.
Pair Corralation between Automatic Data and Agnico Eagle
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.47 times more return on investment than Agnico Eagle. However, Automatic Data Processing is 2.12 times less risky than Agnico Eagle. It trades about 0.41 of its potential returns per unit of risk. Agnico Eagle Mines is currently generating about 0.06 per unit of risk. If you would invest 26,390 in Automatic Data Processing on September 5, 2024 and sell it today you would earn a total of 2,755 from holding Automatic Data Processing or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Automatic Data Processing vs. Agnico Eagle Mines
Performance |
| Timeline |
| Automatic Data Processing |
| Agnico Eagle Mines |
Automatic Data and Agnico Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Agnico Eagle
The main advantage of trading using opposite Automatic Data and Agnico Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Agnico Eagle 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 Agnico Eagle will offset losses from the drop in Agnico Eagle's long position.The idea behind Automatic Data Processing and Agnico Eagle Mines pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Agnico Eagle vs. Mitsubishi Gas Chemical | Agnico Eagle vs. Silicon Motion Technology | Agnico Eagle vs. Automatic Data Processing | Agnico Eagle vs. Public Storage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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