Correlation Between BASE and Automatic Data
Can any of the company-specific risk be diversified away by investing in both BASE 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 BASE and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASE Inc and Automatic Data Processing, you can compare the effects of market volatilities on BASE 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 BASE with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASE and Automatic Data.
Diversification Opportunities for BASE and Automatic Data
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BASE and Automatic is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc 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 BASE 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 BASE Inc 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 BASE i.e., BASE and Automatic Data go up and down completely randomly.
Pair Corralation between BASE and Automatic Data
Assuming the 90 days horizon BASE Inc is expected to generate 4.71 times more return on investment than Automatic Data. However, BASE is 4.71 times more volatile than Automatic Data Processing. It trades about 0.21 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of risk. If you would invest 126.00 in BASE Inc on September 25, 2024 and sell it today you would earn a total of 67.00 from holding BASE Inc or generate 53.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.62% |
| Values | Daily Returns |
BASE Inc vs. Automatic Data Processing
Performance |
| Timeline |
| BASE Inc |
| Automatic Data Processing |
BASE and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASE and Automatic Data
The main advantage of trading using opposite BASE and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASE 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.| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Auddia Inc | BASE vs. Maxwell Resource |
| Automatic Data vs. Dubber Limited | Automatic Data vs. Advanced Health Intelligence | Automatic Data vs. Danavation Technologies Corp | Automatic Data vs. BASE Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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