Correlation Between Automatic Data and Annaly Capital
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Annaly Capital 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 Annaly Capital 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 Annaly Capital Management,, you can compare the effects of market volatilities on Automatic Data and Annaly Capital 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 Annaly Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Annaly Capital.
Diversification Opportunities for Automatic Data and Annaly Capital
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Automatic and Annaly is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Annaly Capital Management, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annaly Capital Manag 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 Annaly Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annaly Capital Manag has no effect on the direction of Automatic Data i.e., Automatic Data and Annaly Capital go up and down completely randomly.
Pair Corralation between Automatic Data and Annaly Capital
Assuming the 90 days trading horizon Automatic Data Processing is expected to under-perform the Annaly Capital. But the stock apears to be less risky and, when comparing its historical volatility, Automatic Data Processing is 1.27 times less risky than Annaly Capital. The stock trades about -0.13 of its potential returns per unit of risk. The Annaly Capital Management, is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 11,586 in Annaly Capital Management, on October 12, 2024 and sell it today you would lose (247.00) from holding Annaly Capital Management, or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Automatic Data Processing vs. Annaly Capital Management,
Performance |
| Timeline |
| Automatic Data Processing |
| Annaly Capital Manag |
Automatic Data and Annaly Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Annaly Capital
The main advantage of trading using opposite Automatic Data and Annaly Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Annaly Capital 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 Annaly Capital will offset losses from the drop in Annaly Capital's long position.| Automatic Data vs. salesforce inc | Automatic Data vs. The Trade Desk | Automatic Data vs. Globus Medical, | Automatic Data vs. Costco Wholesale |
| Annaly Capital vs. Verizon Communications | Annaly Capital vs. Unity Software | Annaly Capital vs. T Mobile | Annaly Capital vs. Metalurgica Gerdau 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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