Correlation Between Automatic Data and Stewart Information
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Stewart Information 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 Stewart Information 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 Stewart Information Services, you can compare the effects of market volatilities on Automatic Data and Stewart Information 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 Stewart Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Stewart Information.
Diversification Opportunities for Automatic Data and Stewart Information
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Automatic and Stewart is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Stewart Information Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stewart Information 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 Stewart Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stewart Information has no effect on the direction of Automatic Data i.e., Automatic Data and Stewart Information go up and down completely randomly.
Pair Corralation between Automatic Data and Stewart Information
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.61 times more return on investment than Stewart Information. However, Automatic Data Processing is 1.64 times less risky than Stewart Information. It trades about 0.33 of its potential returns per unit of risk. Stewart Information Services is currently generating about 0.18 per unit of risk. If you would invest 26,695 in Automatic Data Processing on August 28, 2024 and sell it today you would earn a total of 2,300 from holding Automatic Data Processing or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. Stewart Information Services
Performance |
| Timeline |
| Automatic Data Processing |
| Stewart Information |
Automatic Data and Stewart Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Stewart Information
The main advantage of trading using opposite Automatic Data and Stewart Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Stewart Information 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 Stewart Information will offset losses from the drop in Stewart Information's long position.The idea behind Automatic Data Processing and Stewart Information Services pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Stewart Information vs. Superior Plus Corp | Stewart Information vs. NMI Holdings | Stewart Information vs. Origin Agritech | Stewart Information vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |