Correlation Between Charter Communications and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Automatic Data Processing, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Automatic Data.
Diversification Opportunities for Charter Communications and Automatic Data
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Charter and Automatic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications 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 Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Automatic Data go up and down completely randomly.
Pair Corralation between Charter Communications and Automatic Data
Assuming the 90 days trading horizon Charter Communications is expected to generate 3.61 times more return on investment than Automatic Data. However, Charter Communications is 3.61 times more volatile than Automatic Data Processing. It trades about 0.23 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.33 per unit of risk. If you would invest 30,170 in Charter Communications on August 30, 2024 and sell it today you would earn a total of 6,745 from holding Charter Communications or generate 22.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Charter Communications vs. Automatic Data Processing
Performance |
| Timeline |
| Charter Communications |
| Automatic Data Processing |
Charter Communications and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Automatic Data
The main advantage of trading using opposite Charter Communications and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc |
| Automatic Data vs. Superior Plus Corp | Automatic Data vs. SIVERS SEMICONDUCTORS AB | Automatic Data vs. Talanx AG | Automatic Data vs. 2G ENERGY |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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