Correlation Between MAG SILVER and Automatic Data
Can any of the company-specific risk be diversified away by investing in both MAG SILVER 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 MAG SILVER and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAG SILVER and Automatic Data Processing, you can compare the effects of market volatilities on MAG SILVER 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 MAG SILVER with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAG SILVER and Automatic Data.
Diversification Opportunities for MAG SILVER and Automatic Data
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MAG and Automatic is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MAG SILVER 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 MAG SILVER 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 MAG SILVER 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 MAG SILVER i.e., MAG SILVER and Automatic Data go up and down completely randomly.
Pair Corralation between MAG SILVER and Automatic Data
Assuming the 90 days trading horizon MAG SILVER is expected to under-perform the Automatic Data. In addition to that, MAG SILVER is 1.49 times more volatile than Automatic Data Processing. It trades about -0.19 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about -0.05 per unit of volatility. If you would invest 27,893 in Automatic Data Processing on October 11, 2024 and sell it today you would lose (408.00) from holding Automatic Data Processing or give up 1.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAG SILVER vs. Automatic Data Processing
Performance |
| Timeline |
| MAG SILVER |
| Automatic Data Processing |
MAG SILVER and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAG SILVER and Automatic Data
The main advantage of trading using opposite MAG SILVER and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAG SILVER 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.| MAG SILVER vs. Cincinnati Financial Corp | MAG SILVER vs. The Hanover Insurance | MAG SILVER vs. SUN LIFE FINANCIAL | MAG SILVER vs. National Beverage Corp |
| Automatic Data vs. Charter Communications | Automatic Data vs. Chongqing Machinery Electric | Automatic Data vs. INTERSHOP Communications Aktiengesellschaft | Automatic Data vs. INTERNET INJPADR 1 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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