Correlation Between Exponent and Paycor HCM

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

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

Diversification Opportunities for Exponent and Paycor HCM

-0.8

Correlation Coefficient

Exponent  Paycor HCM

Pay attention - limited upside

The 3 months correlation between Exponent and Paycor is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Paycor HCM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycor HCM and Exponent 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 Exponent 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 Exponent i.e., Exponent and Paycor HCM go up and down completely randomly.

Pair Corralation between Exponent and Paycor HCM

Given the investment horizon of 90 days Exponent is expected to under-perform the Paycor HCM. But the stock apears to be less risky and, when comparing its historical volatility, Exponent is 1.56 times less risky than Paycor HCM. The stock trades about -0.3 of its potential returns per unit of risk. The Paycor HCM is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,748  in Paycor HCM on September 23, 2024 and sell it today you would earn a total of  158.00  from holding Paycor HCM or generate 9.04% return on investment over 90 days.

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

Exponent  vs.  Paycor HCM

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Exponent and Paycor HCM

The main advantage of trading using opposite Exponent and Paycor HCM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exponent 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 Exponent 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.

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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.