Correlation Between Public Storage and Paycom Software

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

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

Diversification Opportunities for Public Storage and Paycom Software

0.18

Correlation Coefficient

Public Storage  Paycom Software

Average diversification

The 3 months correlation between Public and Paycom is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Public Storage and Paycom Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycom Software and Public Storage 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 Public Storage are associated (or correlated) with Paycom Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycom Software has no effect on the direction of Public Storage i.e., Public Storage and Paycom Software go up and down completely randomly.

Pair Corralation between Public Storage and Paycom Software

Assuming the 90 days trading horizon Public Storage is expected to generate 0.55 times more return on investment than Paycom Software. However, Public Storage is 1.83 times less risky than Paycom Software. It trades about -0.02 of its potential returns per unit of risk. Paycom Software is currently generating about -0.28 per unit of risk. If you would invest  36,372  in Public Storage on October 23, 2024 and sell it today you would lose (228.00) from holding Public Storage or give up 0.63% of portfolio value over 90 days.

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

Public Storage  vs.  Paycom Software

Public Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Public Storage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Paycom Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paycom Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Public Storage and Paycom Software

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

The idea behind Public Storage and Paycom Software 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.