Correlation Between Dayforce and Clarke

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

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

Diversification Opportunities for Dayforce and Clarke

0.83

Correlation Coefficient

Dayforce  Clarke

Very poor diversification

The 3 months correlation between Dayforce and Clarke is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Dayforce and Clarke Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarke Inc and Dayforce 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 Dayforce are associated (or correlated) with Clarke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarke Inc has no effect on the direction of Dayforce i.e., Dayforce and Clarke go up and down completely randomly.

Pair Corralation between Dayforce and Clarke

Assuming the 90 days trading horizon Dayforce is expected to under-perform the Clarke. In addition to that, Dayforce is 2.9 times more volatile than Clarke Inc. It trades about -0.14 of its total potential returns per unit of risk. Clarke Inc is currently generating about -0.11 per unit of volatility. If you would invest  2,370  in Clarke Inc on December 28, 2024 and sell it today you would lose (120.00) from holding Clarke Inc or give up 5.06% of portfolio value over 90 days.

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

Dayforce  vs.  Clarke Inc

Dayforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dayforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Clarke Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clarke Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Clarke is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Dayforce and Clarke

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

The idea behind Dayforce and Clarke Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.