Correlation Between Wheaton Precious and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Wheaton Precious 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 Wheaton Precious and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheaton Precious Metals and Automatic Data Processing, you can compare the effects of market volatilities on Wheaton Precious 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 Wheaton Precious with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheaton Precious and Automatic Data.
Diversification Opportunities for Wheaton Precious and Automatic Data
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wheaton and Automatic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wheaton Precious Metals 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 Wheaton Precious 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 Wheaton Precious Metals 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 Wheaton Precious i.e., Wheaton Precious and Automatic Data go up and down completely randomly.
Pair Corralation between Wheaton Precious and Automatic Data
Assuming the 90 days trading horizon Wheaton Precious is expected to generate 2.24 times less return on investment than Automatic Data. But when comparing it to its historical volatility, Wheaton Precious Metals is 2.46 times less risky than Automatic Data. It trades about 0.04 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 21,541 in Automatic Data Processing on October 26, 2024 and sell it today you would earn a total of 8,244 from holding Automatic Data Processing or generate 38.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Wheaton Precious Metals vs. Automatic Data Processing
Performance |
| Timeline |
| Wheaton Precious Metals |
| Automatic Data Processing |
Wheaton Precious and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheaton Precious and Automatic Data
The main advantage of trading using opposite Wheaton Precious and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheaton Precious 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.| Wheaton Precious vs. Seraphim Space Investment | Wheaton Precious vs. Host Hotels Resorts | Wheaton Precious vs. PPHE Hotel Group | Wheaton Precious vs. Bankers Investment Trust |
| Automatic Data vs. Travel Leisure Co | Automatic Data vs. LBG Media PLC | Automatic Data vs. Universal Display Corp | Automatic Data vs. Molson Coors Beverage |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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