Correlation Between Automatic Data and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Fidelity National 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 Fidelity National 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 Fidelity National Information, you can compare the effects of market volatilities on Automatic Data and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Fidelity National.
Diversification Opportunities for Automatic Data and Fidelity National
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Automatic and Fidelity is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Automatic Data i.e., Automatic Data and Fidelity National go up and down completely randomly.
Pair Corralation between Automatic Data and Fidelity National
Assuming the 90 days horizon Automatic Data Processing is expected to generate 0.84 times more return on investment than Fidelity National. However, Automatic Data Processing is 1.2 times less risky than Fidelity National. It trades about 0.33 of its potential returns per unit of risk. Fidelity National Information is currently generating about -0.11 per unit of risk. If you would invest 26,715 in Automatic Data Processing on August 30, 2024 and sell it today you would earn a total of 2,320 from holding Automatic Data Processing or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Automatic Data Processing vs. Fidelity National Information
Performance |
| Timeline |
| Automatic Data Processing |
| Fidelity National |
Automatic Data and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Fidelity National
The main advantage of trading using opposite Automatic Data and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| Automatic Data vs. Superior Plus Corp | Automatic Data vs. SIVERS SEMICONDUCTORS AB | Automatic Data vs. Talanx AG | Automatic Data vs. 2G ENERGY |
| Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc | Fidelity National vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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