Correlation Between Automatic Data and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on Automatic Data and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Quaker Chemical.
Diversification Opportunities for Automatic Data and Quaker Chemical
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Automatic and Quaker is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of Automatic Data i.e., Automatic Data and Quaker Chemical go up and down completely randomly.
Pair Corralation between Automatic Data and Quaker Chemical
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.71 times more return on investment than Quaker Chemical. However, Automatic Data Processing is 1.4 times less risky than Quaker Chemical. It trades about -0.14 of its potential returns per unit of risk. Quaker Chemical is currently generating about -0.36 per unit of risk. If you would invest 28,669 in Automatic Data Processing on September 22, 2024 and sell it today you would lose (934.00) from holding Automatic Data Processing or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Quaker Chemical
Performance |
| Timeline |
| Automatic Data Processing |
| Quaker Chemical |
Automatic Data and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Quaker Chemical
The main advantage of trading using opposite Automatic Data and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| Automatic Data vs. Paychex | Automatic Data vs. Superior Plus Corp | Automatic Data vs. SIVERS SEMICONDUCTORS AB | Automatic Data vs. NorAm Drilling AS |
| Quaker Chemical vs. TERADATA | Quaker Chemical vs. Datang International Power | Quaker Chemical vs. Science Applications International | Quaker Chemical 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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