Correlation Between Fidelity National and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Fidelity National 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 Fidelity National and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity National Information and Automatic Data Processing, you can compare the effects of market volatilities on Fidelity National 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 Fidelity National with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity National and Automatic Data.
Diversification Opportunities for Fidelity National and Automatic Data
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fidelity and Automatic is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity National Information 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 Fidelity National 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 Fidelity National Information 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 Fidelity National i.e., Fidelity National and Automatic Data go up and down completely randomly.
Pair Corralation between Fidelity National and Automatic Data
Assuming the 90 days horizon Fidelity National Information is expected to under-perform the Automatic Data. But the stock apears to be less risky and, when comparing its historical volatility, Fidelity National Information is 1.02 times less risky than Automatic Data. The stock trades about -0.05 of its potential returns per unit of risk. The Automatic Data Processing is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 26,885 in Automatic Data Processing on August 24, 2024 and sell it today you would earn a total of 1,520 from holding Automatic Data Processing or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity National Information vs. Automatic Data Processing
Performance |
| Timeline |
| Fidelity National |
| Automatic Data Processing |
Fidelity National and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity National and Automatic Data
The main advantage of trading using opposite Fidelity National and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity National 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.| Fidelity National vs. Automatic Data Processing | Fidelity National vs. Paychex | Fidelity National vs. Experian plc | Fidelity National vs. Equifax |
| Automatic Data vs. Compagnie Plastic Omnium | Automatic Data vs. AEON STORES | Automatic Data vs. Qurate Retail Series | Automatic Data vs. EAGLE MATERIALS |
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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