Correlation Between Automatic Data and Xp
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Xp 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 Xp 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 Xp Inc, you can compare the effects of market volatilities on Automatic Data and Xp 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 Xp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Xp.
Diversification Opportunities for Automatic Data and Xp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Automatic and Xp is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp 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 Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Automatic Data i.e., Automatic Data and Xp go up and down completely randomly.
Pair Corralation between Automatic Data and Xp
Assuming the 90 days trading horizon Automatic Data Processing is expected to generate 0.68 times more return on investment than Xp. However, Automatic Data Processing is 1.48 times less risky than Xp. It trades about 0.19 of its potential returns per unit of risk. Xp Inc is currently generating about -0.05 per unit of risk. If you would invest 4,781 in Automatic Data Processing on September 3, 2024 and sell it today you would earn a total of 2,915 from holding Automatic Data Processing or generate 60.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 71.89% |
| Values | Daily Returns |
Automatic Data Processing vs. Xp Inc
Performance |
| Timeline |
| Automatic Data Processing |
| Xp Inc |
Automatic Data and Xp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Xp
The main advantage of trading using opposite Automatic Data and Xp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Xp 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 Xp will offset losses from the drop in Xp's long position.| Automatic Data vs. Fundo Investimento Imobiliario | Automatic Data vs. Fras le SA | Automatic Data vs. Western Digital | Automatic Data vs. Clave Indices De |
| Xp vs. Metalurgica Gerdau SA | Xp vs. Healthpeak Properties | Xp vs. Extra Space Storage | Xp vs. Charter Communications |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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