Correlation Between Black Knight and Paycor HCM

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

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

Diversification Opportunities for Black Knight and Paycor HCM

0.82

Correlation Coefficient

Black Knight  Paycor HCM

Very poor diversification

The 3 months correlation between Black and Paycor is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Black Knight and Paycor HCM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycor HCM and Black Knight 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 Black Knight are associated (or correlated) with Paycor HCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycor HCM has no effect on the direction of Black Knight i.e., Black Knight and Paycor HCM go up and down completely randomly.

Pair Corralation between Black Knight and Paycor HCM

If you would invest  1,410  in Paycor HCM on September 23, 2024 and sell it today you would earn a total of  496.00  from holding Paycor HCM or generate 35.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	2.33%
Values	Daily Returns

Black Knight  vs.  Paycor HCM

Black Knight

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Knight has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Black Knight is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Paycor HCM

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paycor HCM are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Paycor HCM reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Knight and Paycor HCM

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

The idea behind Black Knight and Paycor HCM 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.