Correlation Between Automatic Data and Real Estate

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

Diversification Opportunities for Automatic Data and Real Estate

0.73

Correlation Coefficient

Automatic Data  Real Estate

Poor diversification

The 3 months correlation between Automatic and Real is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and Real Estate Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Estate Investors 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 Real Estate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Estate Investors has no effect on the direction of Automatic Data i.e., Automatic Data and Real Estate go up and down completely randomly.

Pair Corralation between Automatic Data and Real Estate

Assuming the 90 days trading horizon Automatic Data is expected to generate 2.49 times less return on investment than Real Estate. In addition to that, Automatic Data is 1.16 times more volatile than Real Estate Investors. It trades about 0.06 of its total potential returns per unit of risk. Real Estate Investors is currently generating about 0.17 per unit of volatility. If you would invest  2,913  in Real Estate Investors on April 23, 2025 and sell it today you would earn a total of  287.00  from holding Real Estate Investors or generate 9.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Automatic Data Processing  vs.  Real Estate Investors

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 4 (%) of all global equities and portfolios over the last 90 days. 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.

Real Estate Investors

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Real Estate Investors are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Real Estate may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Automatic Data and Real Estate

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

The idea behind Automatic Data Processing and Real Estate Investors 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.