Correlation Between Insurance Australia and Automatic Data
Can any of the company-specific risk be diversified away by investing in both Insurance Australia 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 Insurance Australia and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insurance Australia Group and Automatic Data Processing, you can compare the effects of market volatilities on Insurance Australia 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 Insurance Australia with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insurance Australia and Automatic Data.
Diversification Opportunities for Insurance Australia and Automatic Data
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Insurance and Automatic is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Insurance Australia Group 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 Insurance Australia 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 Insurance Australia Group 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 Insurance Australia i.e., Insurance Australia and Automatic Data go up and down completely randomly.
Pair Corralation between Insurance Australia and Automatic Data
Assuming the 90 days horizon Insurance Australia is expected to generate 1.34 times less return on investment than Automatic Data. In addition to that, Insurance Australia is 1.57 times more volatile than Automatic Data Processing. It trades about 0.09 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.19 per unit of volatility. If you would invest 24,790 in Automatic Data Processing on September 19, 2024 and sell it today you would earn a total of 3,515 from holding Automatic Data Processing or generate 14.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Insurance Australia Group vs. Automatic Data Processing
Performance |
Timeline |
Insurance Australia |
Automatic Data Processing |
Insurance Australia and Automatic Data Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Insurance Australia and Automatic Data
The main advantage of trading using opposite Insurance Australia and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insurance Australia 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.Insurance Australia vs. Evolution Mining Limited | Insurance Australia vs. UNITED UTILITIES GR | Insurance Australia vs. United Utilities Group | Insurance Australia vs. Playtech plc |
Automatic Data vs. Insurance Australia Group | Automatic Data vs. National Storage Affiliates | Automatic Data vs. Goosehead Insurance | Automatic Data vs. Selective Insurance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |