Correlation Between Automatic Data and CBRE
Can any of the company-specific risk be diversified away by investing in both Automatic Data and CBRE 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 CBRE 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 CBRE Group, you can compare the effects of market volatilities on Automatic Data and CBRE 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 CBRE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and CBRE.
Diversification Opportunities for Automatic Data and CBRE
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and CBRE is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and CBRE Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBRE Group 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 CBRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBRE Group has no effect on the direction of Automatic Data i.e., Automatic Data and CBRE go up and down completely randomly.
Pair Corralation between Automatic Data and CBRE
Assuming the 90 days trading horizon Automatic Data is expected to generate 1.46 times less return on investment than CBRE. But when comparing it to its historical volatility, Automatic Data Processing is 1.89 times less risky than CBRE. It trades about 0.21 of its potential returns per unit of risk. CBRE Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 46,671 in CBRE Group on September 2, 2024 and sell it today you would earn a total of 32,254 from holding CBRE Group or generate 69.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.09% |
| Values | Daily Returns |
Automatic Data Processing vs. CBRE Group
Performance |
| Timeline |
| Automatic Data Processing |
| CBRE Group |
Automatic Data and CBRE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and CBRE
The main advantage of trading using opposite Automatic Data and CBRE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, CBRE 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 CBRE will offset losses from the drop in CBRE's long position.| Automatic Data vs. Zoom Video Communications | Automatic Data vs. Marvell Technology | Automatic Data vs. Electronic Arts | Automatic Data vs. Align Technology |
| CBRE vs. Raytheon Technologies | CBRE vs. Zoom Video Communications | CBRE vs. Verizon Communications | CBRE vs. Take Two Interactive Software |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |