Correlation Between Automatic Data and Intuit

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

Diversification Opportunities for Automatic Data and Intuit

0.26

Correlation Coefficient

Automatic Data  Intuit

Modest diversification

The 3 months correlation between Automatic and Intuit is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Intuit Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuit 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 Intuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuit Inc has no effect on the direction of Automatic Data i.e., Automatic Data and Intuit go up and down completely randomly.

Pair Corralation between Automatic Data and Intuit

Considering the 90-day investment horizon Automatic Data is expected to generate 8.05 times less return on investment than Intuit. But when comparing it to its historical volatility, Automatic Data Processing is 1.58 times less risky than Intuit. It trades about 0.04 of its potential returns per unit of risk. Intuit Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  63,133  in Intuit Inc on May 3, 2025 and sell it today you would earn a total of  14,389  from holding Intuit Inc or generate 22.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Automatic Data Processing  vs.  Intuit Inc

Automatic Data Processing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Intuit Inc

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intuit Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Intuit unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Automatic Data and Intuit

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

The idea behind Automatic Data Processing and Intuit Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.