Correlation Between Automatic Data and Continental
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Continental 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 Continental 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 Camden Property Trust, you can compare the effects of market volatilities on Automatic Data and Continental 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 Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Continental.
Diversification Opportunities for Automatic Data and Continental
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and Continental is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust 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 Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of Automatic Data i.e., Automatic Data and Continental go up and down completely randomly.
Pair Corralation between Automatic Data and Continental
Assuming the 90 days horizon Automatic Data Processing is expected to generate 1.1 times more return on investment than Continental. However, Automatic Data is 1.1 times more volatile than Camden Property Trust. It trades about -0.09 of its potential returns per unit of risk. Camden Property Trust is currently generating about -0.27 per unit of risk. If you would invest 28,848 in Automatic Data Processing on September 24, 2024 and sell it today you would lose (633.00) from holding Automatic Data Processing or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Camden Property Trust
Performance |
| Timeline |
| Automatic Data Processing |
| Camden Property Trust |
Automatic Data and Continental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Continental
The main advantage of trading using opposite Automatic Data and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.| Automatic Data vs. Fiserv Inc | Automatic Data vs. Paychex | Automatic Data vs. Experian plc | Automatic Data vs. Verisk Analytics |
| Continental vs. DATAGROUP SE | Continental vs. Sabra Health Care | Continental vs. Cardinal Health | Continental vs. Automatic Data Processing |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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