Correlation Between Automatic Data and Schlumberger
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Schlumberger 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 Schlumberger 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 Schlumberger Limited, you can compare the effects of market volatilities on Automatic Data and Schlumberger 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 Schlumberger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Schlumberger.
Diversification Opportunities for Automatic Data and Schlumberger
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Automatic and Schlumberger is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Schlumberger Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger Limited 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger Limited has no effect on the direction of Automatic Data i.e., Automatic Data and Schlumberger go up and down completely randomly.
Pair Corralation between Automatic Data and Schlumberger
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.52 times more return on investment than Schlumberger. However, Automatic Data Processing is 1.93 times less risky than Schlumberger. It trades about 0.06 of its potential returns per unit of risk. Schlumberger Limited is currently generating about 0.01 per unit of risk. If you would invest 5,034 in Automatic Data Processing on October 12, 2024 and sell it today you would earn a total of 2,301 from holding Automatic Data Processing or generate 45.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.04% |
| Values | Daily Returns |
Automatic Data Processing vs. Schlumberger Limited
Performance |
| Timeline |
| Automatic Data Processing |
| Schlumberger Limited |
Automatic Data and Schlumberger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Schlumberger
The main advantage of trading using opposite Automatic Data and Schlumberger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Schlumberger 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 Schlumberger will offset losses from the drop in Schlumberger's long position.| Automatic Data vs. Energisa SA | Automatic Data vs. BTG Pactual Logstica | Automatic Data vs. Plano Plano Desenvolvimento | Automatic Data vs. Ares Management |
| Schlumberger vs. Multilaser Industrial SA | Schlumberger vs. Automatic Data Processing | Schlumberger vs. METISA Metalrgica Timboense | Schlumberger vs. Tres Tentos Agroindustrial |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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