Correlation Between Automatic Bank and Payton L
Can any of the company-specific risk be diversified away by investing in both Automatic Bank and Payton L 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 Automatic Bank and Payton L into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Bank Services and Payton L, you can compare the effects of market volatilities on Automatic Bank and Payton L 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 Automatic Bank with a short position of Payton L. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Bank and Payton L.
Diversification Opportunities for Automatic Bank and Payton L
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Automatic and Payton is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Bank Services and Payton L in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payton L and Automatic Bank 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 Automatic Bank Services are associated (or correlated) with Payton L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payton L has no effect on the direction of Automatic Bank i.e., Automatic Bank and Payton L go up and down completely randomly.
Pair Corralation between Automatic Bank and Payton L
Assuming the 90 days trading horizon Automatic Bank Services is expected to generate 1.27 times more return on investment than Payton L. However, Automatic Bank is 1.27 times more volatile than Payton L. It trades about 0.24 of its potential returns per unit of risk. Payton L is currently generating about 0.14 per unit of risk. If you would invest 133,700 in Automatic Bank Services on September 3, 2024 and sell it today you would earn a total of 79,900 from holding Automatic Bank Services or generate 59.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Bank Services vs. Payton L
Performance |
| Timeline |
| Automatic Bank Services |
| Payton L |
Automatic Bank and Payton L Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Bank and Payton L
The main advantage of trading using opposite Automatic Bank and Payton L positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Bank position performs unexpectedly, Payton L 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 Payton L will offset losses from the drop in Payton L's long position.The idea behind Automatic Bank Services and Payton L pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Payton L vs. Payton Planar Magnetics | Payton L vs. Telsys | Payton L vs. Raval ACS | Payton L vs. Automatic Bank Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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