Correlation Between Automatic Data and Wayside Technology
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Wayside Technology 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 Wayside Technology 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 Wayside Technology Group, you can compare the effects of market volatilities on Automatic Data and Wayside Technology 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 Wayside Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Wayside Technology.
Diversification Opportunities for Automatic Data and Wayside Technology
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Automatic and Wayside is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Wayside Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wayside Technology 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 Wayside Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wayside Technology has no effect on the direction of Automatic Data i.e., Automatic Data and Wayside Technology go up and down completely randomly.
Pair Corralation between Automatic Data and Wayside Technology
Assuming the 90 days horizon Automatic Data is expected to generate 3.33 times less return on investment than Wayside Technology. But when comparing it to its historical volatility, Automatic Data Processing is 2.81 times less risky than Wayside Technology. It trades about 0.12 of its potential returns per unit of risk. Wayside Technology Group is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,836 in Wayside Technology Group on September 4, 2024 and sell it today you would earn a total of 7,764 from holding Wayside Technology Group or generate 160.55% 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. Wayside Technology Group
Performance |
| Timeline |
| Automatic Data Processing |
| Wayside Technology |
Automatic Data and Wayside Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Wayside Technology
The main advantage of trading using opposite Automatic Data and Wayside Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Wayside Technology 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 Wayside Technology will offset losses from the drop in Wayside Technology's long position.| Automatic Data vs. EEDUCATION ALBERT AB | Automatic Data vs. SCANDMEDICAL SOLDK 040 | Automatic Data vs. Siamgas And Petrochemicals | Automatic Data vs. MEDICAL FACILITIES NEW |
| Wayside Technology vs. MCEWEN MINING INC | Wayside Technology vs. COMBA TELECOM SYST | Wayside Technology vs. Consolidated Communications Holdings | Wayside Technology vs. Tower One Wireless |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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