Correlation Between Automatic Data and CPFL Energia
Can any of the company-specific risk be diversified away by investing in both Automatic Data and CPFL Energia 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 CPFL Energia 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 CPFL Energia SA, you can compare the effects of market volatilities on Automatic Data and CPFL Energia 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 CPFL Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and CPFL Energia.
Diversification Opportunities for Automatic Data and CPFL Energia
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Automatic and CPFL is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and CPFL Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPFL Energia SA 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 CPFL Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPFL Energia SA has no effect on the direction of Automatic Data i.e., Automatic Data and CPFL Energia go up and down completely randomly.
Pair Corralation between Automatic Data and CPFL Energia
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 1.62 times more return on investment than CPFL Energia. However, Automatic Data is 1.62 times more volatile than CPFL Energia SA. It trades about 0.25 of its potential returns per unit of risk. CPFL Energia SA is currently generating about -0.07 per unit of risk. If you would invest 6,979 in Automatic Data Processing on August 24, 2024 and sell it today you would earn a total of 401.00 from holding Automatic Data Processing or generate 5.75% 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. CPFL Energia SA
Performance |
| Timeline |
| Automatic Data Processing |
| CPFL Energia SA |
Automatic Data and CPFL Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and CPFL Energia
The main advantage of trading using opposite Automatic Data and CPFL Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, CPFL Energia 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 CPFL Energia will offset losses from the drop in CPFL Energia's long position.| Automatic Data vs. BTG Pactual Logstica | Automatic Data vs. Plano Plano Desenvolvimento | Automatic Data vs. Companhia Habitasul de | Automatic Data vs. The Procter Gamble |
| CPFL Energia vs. WEG SA | CPFL Energia vs. Automatic Data Processing | CPFL Energia vs. Atom Empreendimentos e | CPFL Energia vs. Neurocrine Biosciences |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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