Correlation Between Gen Digital and Paymentus Holdings

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

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

Diversification Opportunities for Gen Digital and Paymentus Holdings

0.76

Correlation Coefficient

Gen Digital  Paymentus Holdings

Poor diversification

The 3 months correlation between Gen and Paymentus is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Paymentus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paymentus Holdings and Gen Digital 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 Gen Digital are associated (or correlated) with Paymentus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paymentus Holdings has no effect on the direction of Gen Digital i.e., Gen Digital and Paymentus Holdings go up and down completely randomly.

Pair Corralation between Gen Digital and Paymentus Holdings

Considering the 90-day investment horizon Gen Digital is expected to generate 2.25 times less return on investment than Paymentus Holdings. But when comparing it to its historical volatility, Gen Digital is 1.99 times less risky than Paymentus Holdings. It trades about 0.08 of its potential returns per unit of risk. Paymentus Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  783.00  in Paymentus Holdings on December 4, 2024 and sell it today you would earn a total of  1,855  from holding Paymentus Holdings or generate 236.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Gen Digital  vs.  Paymentus Holdings

Gen Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gen Digital 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 technical and fundamental 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.

Paymentus Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paymentus Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gen Digital and Paymentus Holdings

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

The idea behind Gen Digital and Paymentus Holdings 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.