Correlation Between Automatic Data and Equatorial Energia
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Equatorial 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 Equatorial 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 Equatorial Energia SA, you can compare the effects of market volatilities on Automatic Data and Equatorial 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 Equatorial Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Equatorial Energia.
Diversification Opportunities for Automatic Data and Equatorial Energia
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Automatic and Equatorial is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Equatorial Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equatorial Energia 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 Equatorial Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equatorial Energia has no effect on the direction of Automatic Data i.e., Automatic Data and Equatorial Energia go up and down completely randomly.
Pair Corralation between Automatic Data and Equatorial Energia
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.7 times more return on investment than Equatorial Energia. However, Automatic Data Processing is 1.42 times less risky than Equatorial Energia. It trades about 0.24 of its potential returns per unit of risk. Equatorial Energia SA is currently generating about 0.06 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. Equatorial Energia SA
Performance |
| Timeline |
| Automatic Data Processing |
| Equatorial Energia |
Automatic Data and Equatorial Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Equatorial Energia
The main advantage of trading using opposite Automatic Data and Equatorial Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Equatorial 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 Equatorial Energia will offset losses from the drop in Equatorial Energia'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 |
| Equatorial Energia vs. Localiza Rent a | Equatorial Energia vs. Raia Drogasil SA | Equatorial Energia vs. Engie Brasil Energia | Equatorial Energia vs. Lojas Renner SA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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