Correlation Between Automatic Data and DHI
Can any of the company-specific risk be diversified away by investing in both Automatic Data and DHI 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 DHI 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 DHI Group, you can compare the effects of market volatilities on Automatic Data and DHI 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 DHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and DHI.
Diversification Opportunities for Automatic Data and DHI
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Automatic and DHI is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group 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 DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of Automatic Data i.e., Automatic Data and DHI go up and down completely randomly.
Pair Corralation between Automatic Data and DHI
Considering the 90-day investment horizon Automatic Data Processing is expected to generate 0.28 times more return on investment than DHI. However, Automatic Data Processing is 3.6 times less risky than DHI. It trades about -0.08 of its potential returns per unit of risk. DHI Group is currently generating about -0.09 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 (441.00) from holding Automatic Data Processing or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automatic Data Processing vs. DHI Group
Performance |
| Timeline |
| Automatic Data Processing |
| DHI Group |
Automatic Data and DHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and DHI
The main advantage of trading using opposite Automatic Data and DHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, DHI 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 DHI will offset losses from the drop in DHI'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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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