Correlation Between Automatic Data and Apple
Can any of the company-specific risk be diversified away by investing in both Automatic Data and Apple 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 Data and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and Apple Inc, you can compare the effects of market volatilities on Automatic Data and Apple 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 Data with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Apple.
Diversification Opportunities for Automatic Data and Apple
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Automatic and Apple is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc and Automatic Data 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 Data Processing are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Automatic Data i.e., Automatic Data and Apple go up and down completely randomly.
Pair Corralation between Automatic Data and Apple
Considering the 90-day investment horizon Automatic Data Processing is expected to generate 0.59 times more return on investment than Apple. However, Automatic Data Processing is 1.71 times less risky than Apple. It trades about -0.11 of its potential returns per unit of risk. Apple Inc is currently generating about -0.19 per unit of risk. If you would invest 24,772 in Automatic Data Processing on January 20, 2024 and sell it today you would lose (573.00) from holding Automatic Data Processing or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Automatic Data Processing vs. Apple Inc
Performance |
| Timeline |
| Automatic Data Processing |
| Apple Inc |
Automatic Data and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and Apple
The main advantage of trading using opposite Automatic Data and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| Automatic Data vs. ExlService Holdings | Automatic Data vs. WNS Holdings | Automatic Data vs. Gartner | Automatic Data vs. The Hackett Group |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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