Correlation Between Automatic Data and Ziprecruiter

Can any of the company-specific risk be diversified away by investing in both Automatic Data and Ziprecruiter 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 Ziprecruiter 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 Ziprecruiter, you can compare the effects of market volatilities on Automatic Data and Ziprecruiter 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 Ziprecruiter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and Ziprecruiter.

Diversification Opportunities for Automatic Data and Ziprecruiter

0.45

Correlation Coefficient

Automatic Data  Ziprecruiter

Very weak diversification

The 3 months correlation between Automatic and Ziprecruiter is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Ziprecruiter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ziprecruiter 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 Ziprecruiter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ziprecruiter has no effect on the direction of Automatic Data i.e., Automatic Data and Ziprecruiter go up and down completely randomly.

Pair Corralation between Automatic Data and Ziprecruiter

Considering the 90-day investment horizon Automatic Data Processing is expected to generate 0.56 times more return on investment than Ziprecruiter. However, Automatic Data Processing is 1.79 times less risky than Ziprecruiter. It trades about 0.01 of its potential returns per unit of risk. Ziprecruiter is currently generating about -0.16 per unit of risk. If you would invest  24,149  in Automatic Data Processing on February 4, 2024 and sell it today you would earn a total of  40.00  from holding Automatic Data Processing or generate 0.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Automatic Data Processing  vs.  Ziprecruiter

Automatic Data Processing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automatic Data Processing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ziprecruiter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ziprecruiter has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Automatic Data and Ziprecruiter

The main advantage of trading using opposite Automatic Data and Ziprecruiter positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, Ziprecruiter 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 Ziprecruiter will offset losses from the drop in Ziprecruiter's long position.

The idea behind Automatic Data Processing and Ziprecruiter 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.