Correlation Between Moneysupermarket and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Moneysupermarket 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 Moneysupermarket and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MoneysupermarketCom Group PLC and Automatic Data Processing, you can compare the effects of market volatilities on Moneysupermarket 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 Moneysupermarket with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moneysupermarket and Automatic Data.
Diversification Opportunities for Moneysupermarket and Automatic Data
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Moneysupermarket and Automatic is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MoneysupermarketCom Group PLC 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 Moneysupermarket 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 MoneysupermarketCom Group PLC 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 Moneysupermarket i.e., Moneysupermarket and Automatic Data go up and down completely randomly.
Pair Corralation between Moneysupermarket and Automatic Data
Assuming the 90 days trading horizon MoneysupermarketCom Group PLC is expected to generate 3.08 times more return on investment than Automatic Data. However, Moneysupermarket is 3.08 times more volatile than Automatic Data Processing. It trades about 0.27 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.37 per unit of risk. If you would invest 18,160 in MoneysupermarketCom Group PLC on November 28, 2024 and sell it today you would earn a total of 1,940 from holding MoneysupermarketCom Group PLC or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MoneysupermarketCom Group PLC vs. Automatic Data Processing
Performance |
| Timeline |
| MoneysupermarketCom |
| Automatic Data Processing |
Moneysupermarket and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moneysupermarket and Automatic Data
The main advantage of trading using opposite Moneysupermarket and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moneysupermarket 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.| Moneysupermarket vs. SMA Solar Technology | Moneysupermarket vs. Vitec Software Group | Moneysupermarket vs. Raytheon Technologies Corp | Moneysupermarket vs. Micron Technology |
| Automatic Data vs. CVS Health Corp | Automatic Data vs. Universal Health Services | Automatic Data vs. Axway Software SA | Automatic Data vs. Aptitude Software Group |
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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