Correlation Between Automatic Data and Mastercard
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Mastercard 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 Mastercard 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 Mastercard, you can compare the effects of market volatilities on Automatic Data and Mastercard 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 Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Mastercard.
Diversification Opportunities for Automatic Data and Mastercard
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Automatic and Mastercard is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard 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 Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of Automatic Data i.e., Automatic Data and Mastercard go up and down completely randomly.
Pair Corralation between Automatic Data and Mastercard
Assuming the 90 days horizon Automatic Data is expected to generate 1.86 times less return on investment than Mastercard. In addition to that, Automatic Data is 1.17 times more volatile than Mastercard. It trades about 0.04 of its total potential returns per unit of risk. Mastercard is currently generating about 0.08 per unit of volatility. If you would invest 33,513 in Mastercard on September 3, 2024 and sell it today you would earn a total of 16,997 from holding Mastercard or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Mastercard
Performance |
| Timeline |
| Automatic Data Processing |
| Mastercard |
Automatic Data and Mastercard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Mastercard
The main advantage of trading using opposite Automatic Data and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard'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 |
| Mastercard vs. UNITED RENTALS | Mastercard vs. Automatic Data Processing | Mastercard vs. CarsalesCom | Mastercard vs. YATRA ONLINE DL 0001 |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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