Correlation Between Endo International and Automatic Data

Can any of the company-specific risk be diversified away by investing in both Endo International 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 Endo International and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Endo International PLC and Automatic Data Processing, you can compare the effects of market volatilities on Endo International 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 Endo International with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endo International and Automatic Data.

Diversification Opportunities for Endo International and Automatic Data

-0.27

Correlation Coefficient

Endo International  Automatic Data

Very good diversification

The 3 months correlation between Endo and Automatic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Endo International PLC 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 Endo International 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 Endo International PLC 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 Endo International i.e., Endo International and Automatic Data go up and down completely randomly.

Pair Corralation between Endo International and Automatic Data

Assuming the 90 days trading horizon Endo International PLC is expected to generate 10.84 times more return on investment than Automatic Data. However, Endo International is 10.84 times more volatile than Automatic Data Processing. It trades about 0.07 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.03 per unit of risk. If you would invest  10.00  in Endo International PLC on October 13, 2024 and sell it today you would earn a total of  61,249  from holding Endo International PLC or generate 612490.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.31%
Values	Daily Returns

Endo International PLC  vs.  Automatic Data Processing

Endo International PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Endo International PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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. In spite of comparatively stable basic indicators, Automatic Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Endo International and Automatic Data

The main advantage of trading using opposite Endo International and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endo International 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.

The idea behind Endo International PLC and Automatic Data Processing 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.