Correlation Between Automatic Data and SIRIUS XM
Can any of the company-specific risk be diversified away by investing in both Automatic Data and SIRIUS XM 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 SIRIUS XM 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 SIRIUS XM RADIO, you can compare the effects of market volatilities on Automatic Data and SIRIUS XM 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 SIRIUS XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and SIRIUS XM.
Diversification Opportunities for Automatic Data and SIRIUS XM
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and SIRIUS is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and SIRIUS XM RADIO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIRIUS XM RADIO 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 SIRIUS XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIRIUS XM RADIO has no effect on the direction of Automatic Data i.e., Automatic Data and SIRIUS XM go up and down completely randomly.
Pair Corralation between Automatic Data and SIRIUS XM
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.34 times more return on investment than SIRIUS XM. However, Automatic Data Processing is 2.97 times less risky than SIRIUS XM. It trades about 0.18 of its potential returns per unit of risk. SIRIUS XM RADIO is currently generating about 0.01 per unit of risk. If you would invest 22,272 in Automatic Data Processing on September 1, 2024 and sell it today you would earn a total of 6,838 from holding Automatic Data Processing or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. SIRIUS XM RADIO
Performance |
| Timeline |
| Automatic Data Processing |
| SIRIUS XM RADIO |
Automatic Data and SIRIUS XM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and SIRIUS XM
The main advantage of trading using opposite Automatic Data and SIRIUS XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, SIRIUS XM 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 SIRIUS XM will offset losses from the drop in SIRIUS XM's long position.| Automatic Data vs. Global Ship Lease | Automatic Data vs. BOSTON BEER A | Automatic Data vs. National Beverage Corp | Automatic Data vs. Digilife Technologies Limited |
| SIRIUS XM vs. SIVERS SEMICONDUCTORS AB | SIRIUS XM vs. Darden Restaurants | SIRIUS XM vs. Reliance Steel Aluminum | SIRIUS XM vs. Q2M Managementberatung AG |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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