Correlation Between Atlas Copco and Rockwell Automation
Can any of the company-specific risk be diversified away by investing in both Atlas Copco and Rockwell Automation 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 Atlas Copco and Rockwell Automation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlas Copco ADR and Rockwell Automation, you can compare the effects of market volatilities on Atlas Copco and Rockwell Automation 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 Atlas Copco with a short position of Rockwell Automation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlas Copco and Rockwell Automation.
Diversification Opportunities for Atlas Copco and Rockwell Automation
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Atlas and Rockwell is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Atlas Copco ADR and Rockwell Automation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockwell Automation and Atlas Copco 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 Atlas Copco ADR are associated (or correlated) with Rockwell Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockwell Automation has no effect on the direction of Atlas Copco i.e., Atlas Copco and Rockwell Automation go up and down completely randomly.
Pair Corralation between Atlas Copco and Rockwell Automation
Assuming the 90 days horizon Atlas Copco ADR is expected to under-perform the Rockwell Automation. But the pink sheet apears to be less risky and, when comparing its historical volatility, Atlas Copco ADR is 1.26 times less risky than Rockwell Automation. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Rockwell Automation is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 30,478 in Rockwell Automation on August 25, 2024 and sell it today you would lose (1,392) from holding Rockwell Automation or give up 4.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlas Copco ADR vs. Rockwell Automation
Performance |
| Timeline |
| Atlas Copco ADR |
| Rockwell Automation |
Atlas Copco and Rockwell Automation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlas Copco and Rockwell Automation
The main advantage of trading using opposite Atlas Copco and Rockwell Automation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlas Copco position performs unexpectedly, Rockwell Automation 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 Rockwell Automation will offset losses from the drop in Rockwell Automation's long position.| Atlas Copco vs. Amaero International | Atlas Copco vs. Aumann AG | Atlas Copco vs. Atlas Copco AB | Atlas Copco vs. Alfa Laval AB |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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