Correlation Between Virgin Wines and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Virgin Wines 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 Virgin Wines and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Virgin Wines UK and Automatic Data Processing, you can compare the effects of market volatilities on Virgin Wines 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 Virgin Wines with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virgin Wines and Automatic Data.
Diversification Opportunities for Virgin Wines and Automatic Data
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Virgin and Automatic is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Virgin Wines UK 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 Virgin Wines 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 Virgin Wines UK 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 Virgin Wines i.e., Virgin Wines and Automatic Data go up and down completely randomly.
Pair Corralation between Virgin Wines and Automatic Data
Assuming the 90 days trading horizon Virgin Wines UK is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, Virgin Wines UK is 1.07 times less risky than Automatic Data. The stock trades about -0.24 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 28,961 in Automatic Data Processing on August 24, 2024 and sell it today you would earn a total of 1,417 from holding Automatic Data Processing or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Virgin Wines UK vs. Automatic Data Processing
Performance |
| Timeline |
| Virgin Wines UK |
| Automatic Data Processing |
Virgin Wines and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Virgin Wines and Automatic Data
The main advantage of trading using opposite Virgin Wines and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virgin Wines 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.| Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Samsung Electronics Co | Virgin Wines vs. Hyundai Motor | Virgin Wines vs. Toyota Motor Corp |
| Automatic Data vs. Hochschild Mining plc | Automatic Data vs. Thor Mining PLC | Automatic Data vs. Atalaya Mining | Automatic Data vs. Melia Hotels |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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