Correlation Between Automatic Data and Gold Road
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Automatic Data and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Gold Road.
Diversification Opportunities for Automatic Data and Gold Road
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Automatic and Gold is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Automatic Data i.e., Automatic Data and Gold Road go up and down completely randomly.
Pair Corralation between Automatic Data and Gold Road
Assuming the 90 days horizon Automatic Data Processing is expected to under-perform the Gold Road. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 1.78 times less risky than Gold Road. The stock trades about -0.03 of its potential returns per unit of risk. The Gold Road Resources is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 113.00 in Gold Road Resources on October 26, 2024 and sell it today you would earn a total of 34.00 from holding Gold Road Resources or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Gold Road Resources
Performance |
| Timeline |
| Automatic Data Processing |
| Gold Road Resources |
Automatic Data and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Gold Road
The main advantage of trading using opposite Automatic Data and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Automatic Data vs. AGNC INVESTMENT | Automatic Data vs. REINET INVESTMENTS SCA | Automatic Data vs. Datadog | Automatic Data vs. MICRONIC MYDATA |
| Gold Road vs. MICRONIC MYDATA | Gold Road vs. Information Services International Dentsu | Gold Road vs. TERADATA | Gold Road 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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