Correlation Between TrueBlue and Automatic Data

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

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

Diversification Opportunities for TrueBlue and Automatic Data

-0.3

Correlation Coefficient

TrueBlue  Automatic Data

Very good diversification

The 3 months correlation between TrueBlue and Automatic is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding TrueBlue 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 TrueBlue 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 TrueBlue 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 TrueBlue i.e., TrueBlue and Automatic Data go up and down completely randomly.

Pair Corralation between TrueBlue and Automatic Data

Considering the 90-day investment horizon TrueBlue is expected to under-perform the Automatic Data. In addition to that, TrueBlue is 3.94 times more volatile than Automatic Data Processing. It trades about -0.12 of its total potential returns per unit of risk. Automatic Data Processing is currently generating about 0.05 per unit of volatility. If you would invest  29,142  in Automatic Data Processing on December 30, 2024 and sell it today you would earn a total of  941.00  from holding Automatic Data Processing or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TrueBlue  vs.  Automatic Data Processing

TrueBlue

Risk-Adjusted Performance

Very Weak

Over the last 90 days TrueBlue 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 fundamental drivers remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Automatic Data Processing

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 4 (%) 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 recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with TrueBlue and Automatic Data

The main advantage of trading using opposite TrueBlue and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TrueBlue 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 TrueBlue 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.