Correlation Between Argo Group and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Argo Group and Automatic Data 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 Argo Group and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group Limited and Automatic Data Processing, you can compare the effects of market volatilities on Argo Group and Automatic Data 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 Argo Group with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Automatic Data.
Diversification Opportunities for Argo Group and Automatic Data
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Argo and Automatic is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and Argo Group 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 Argo Group Limited are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of Argo Group i.e., Argo Group and Automatic Data go up and down completely randomly.
Pair Corralation between Argo Group and Automatic Data
Assuming the 90 days trading horizon Argo Group Limited is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, Argo Group Limited is 1.78 times less risky than Automatic Data. The stock trades about -0.04 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 21,090 in Automatic Data Processing on September 2, 2024 and sell it today you would earn a total of 9,660 from holding Automatic Data Processing or generate 45.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Argo Group Limited vs. Automatic Data Processing
Performance |
| Timeline |
| Argo Group Limited |
| Automatic Data Processing |
Argo Group and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Group and Automatic Data
The main advantage of trading using opposite Argo Group and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| Argo Group vs. Allianz Technology Trust | Argo Group vs. Uber Technologies | Argo Group vs. UNIQA Insurance Group | Argo Group vs. Lendinvest PLC |
| Automatic Data vs. National Beverage Corp | Automatic Data vs. Infrastrutture Wireless Italiane | Automatic Data vs. Broadcom | Automatic Data vs. Gaztransport et Technigaz |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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