Correlation Between Paycom Soft and Digital Turbine

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

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

Diversification Opportunities for Paycom Soft and Digital Turbine

0.28

Correlation Coefficient

Paycom Soft  Digital Turbine

Modest diversification

The 3 months correlation between Paycom and Digital is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Digital Turbine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Turbine and Paycom Soft 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 Soft are associated (or correlated) with Digital Turbine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Turbine has no effect on the direction of Paycom Soft i.e., Paycom Soft and Digital Turbine go up and down completely randomly.

Pair Corralation between Paycom Soft and Digital Turbine

Given the investment horizon of 90 days Paycom Soft is expected to generate 10.82 times less return on investment than Digital Turbine. But when comparing it to its historical volatility, Paycom Soft is 7.3 times less risky than Digital Turbine. It trades about 0.07 of its potential returns per unit of risk. Digital Turbine is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Digital Turbine on December 29, 2024 and sell it today you would earn a total of  102.00  from holding Digital Turbine or generate 56.04% return on investment over 90 days.

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

Paycom Soft  vs.  Digital Turbine

Paycom Soft

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Paycom Soft may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Digital Turbine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Turbine are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Digital Turbine unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paycom Soft and Digital Turbine

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

The idea behind Paycom Soft and Digital Turbine 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.