Correlation Between Automatic Data and FTI Consulting
Can any of the company-specific risk be diversified away by investing in both Automatic Data and FTI Consulting 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 FTI Consulting 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 FTI Consulting, you can compare the effects of market volatilities on Automatic Data and FTI Consulting 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 FTI Consulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and FTI Consulting.
Diversification Opportunities for Automatic Data and FTI Consulting
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Automatic and FTI is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and FTI Consulting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTI Consulting 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 FTI Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTI Consulting has no effect on the direction of Automatic Data i.e., Automatic Data and FTI Consulting go up and down completely randomly.
Pair Corralation between Automatic Data and FTI Consulting
Considering the 90-day investment horizon Automatic Data Processing is expected to generate 1.09 times more return on investment than FTI Consulting. However, Automatic Data is 1.09 times more volatile than FTI Consulting. It trades about 0.22 of its potential returns per unit of risk. FTI Consulting is currently generating about 0.12 per unit of risk. If you would invest 28,644 in Automatic Data Processing on August 28, 2024 and sell it today you would earn a total of 1,823 from holding Automatic Data Processing or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. FTI Consulting
Performance |
| Timeline |
| Automatic Data Processing |
| FTI Consulting |
Automatic Data and FTI Consulting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and FTI Consulting
The main advantage of trading using opposite Automatic Data and FTI Consulting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, FTI Consulting 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 FTI Consulting will offset losses from the drop in FTI Consulting's long position.| Automatic Data vs. Robert Half International | Automatic Data vs. Barrett Business Services | Automatic Data vs. ManpowerGroup | Automatic Data vs. Kforce Inc |
| FTI Consulting vs. Franklin Covey | FTI Consulting vs. TransUnion | FTI Consulting vs. ICF International | FTI Consulting vs. Huron Consulting Group |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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