Correlation Between Paycom Software and Moderna

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

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

Diversification Opportunities for Paycom Software and Moderna

-0.76

Correlation Coefficient

Paycom Software  Moderna

Pay attention - limited upside

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

Pair Corralation between Paycom Software and Moderna

Assuming the 90 days trading horizon Paycom Software is expected to under-perform the Moderna. But the stock apears to be less risky and, when comparing its historical volatility, Paycom Software is 2.84 times less risky than Moderna. The stock trades about -0.27 of its potential returns per unit of risk. The Moderna is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  1,205  in Moderna on October 21, 2024 and sell it today you would lose (147.00) from holding Moderna or give up 12.2% of portfolio value over 90 days.

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

Paycom Software  vs.  Moderna

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 weak basic indicators, Paycom Software sustained solid returns over the last few months and may actually be approaching a breakup point.

Moderna

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Paycom Software and Moderna

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

The idea behind Paycom Software and Moderna 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.