Correlation Between Digital Turbine and Paycom Soft

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

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

Diversification Opportunities for Digital Turbine and Paycom Soft

-0.8

Correlation Coefficient

Digital Turbine  Paycom Soft

Pay attention - limited upside

The 3 months correlation between Digital and Paycom is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Digital Turbine and Paycom Soft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycom Soft and Digital Turbine 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 Digital Turbine are associated (or correlated) with Paycom Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycom Soft has no effect on the direction of Digital Turbine i.e., Digital Turbine and Paycom Soft go up and down completely randomly.

Pair Corralation between Digital Turbine and Paycom Soft

Given the investment horizon of 90 days Digital Turbine is expected to generate 1.4 times less return on investment than Paycom Soft. In addition to that, Digital Turbine is 3.6 times more volatile than Paycom Soft. It trades about 0.03 of its total potential returns per unit of risk. Paycom Soft is currently generating about 0.16 per unit of volatility. If you would invest  14,375  in Paycom Soft on September 3, 2024 and sell it today you would earn a total of  8,866  from holding Paycom Soft or generate 61.68% return on investment over 90 days.

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

Digital Turbine  vs.  Paycom Soft

Digital Turbine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digital Turbine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Paycom Soft

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Paycom Soft exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digital Turbine and Paycom Soft

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

The idea behind Digital Turbine and Paycom Soft 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.