Correlation Between Automatic Data and Etsy
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Etsy 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 Etsy 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 Etsy Inc, you can compare the effects of market volatilities on Automatic Data and Etsy 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 Etsy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Etsy.
Diversification Opportunities for Automatic Data and Etsy
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Automatic and Etsy is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Etsy Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etsy Inc 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 Etsy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etsy Inc has no effect on the direction of Automatic Data i.e., Automatic Data and Etsy go up and down completely randomly.
Pair Corralation between Automatic Data and Etsy
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.76 times more return on investment than Etsy. However, Automatic Data Processing is 1.31 times less risky than Etsy. It trades about 0.19 of its potential returns per unit of risk. Etsy Inc is currently generating about -0.03 per unit of risk. If you would invest 4,696 in Automatic Data Processing on August 26, 2024 and sell it today you would earn a total of 2,704 from holding Automatic Data Processing or generate 57.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.68% |
| Values | Daily Returns |
Automatic Data Processing vs. Etsy Inc
Performance |
| Timeline |
| Automatic Data Processing |
| Etsy Inc |
Automatic Data and Etsy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Etsy
The main advantage of trading using opposite Automatic Data and Etsy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Etsy 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 Etsy will offset losses from the drop in Etsy's long position.| Automatic Data vs. Fras le SA | Automatic Data vs. Clave Indices De | Automatic Data vs. BTG Pactual Logstica | Automatic Data vs. Telefonaktiebolaget LM Ericsson |
| Etsy vs. Fidelity National Information | Etsy vs. Automatic Data Processing | Etsy vs. Bio Techne | Etsy vs. Dell Technologies |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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