Correlation Between Elevance Health, and Automatic Data

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

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

Diversification Opportunities for Elevance Health, and Automatic Data

-0.85

Correlation Coefficient

Elevance Health,  Automatic Data

Pay attention - limited upside

The 3 months correlation between Elevance and Automatic is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health, 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 Elevance Health, 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 Elevance Health, 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 Elevance Health, i.e., Elevance Health, and Automatic Data go up and down completely randomly.

Pair Corralation between Elevance Health, and Automatic Data

If you would invest  7,487  in Automatic Data Processing on October 6, 2024 and sell it today you would earn a total of  65.00  from holding Automatic Data Processing or generate 0.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	88.89%
Values	Daily Returns

Elevance Health,  vs.  Automatic Data Processing

Elevance Health,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Automatic Data Processing

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Automatic Data sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Elevance Health, and Automatic Data

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

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.