Correlation Between Paycom Soft and Edgio

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Can any of the company-specific risk be diversified away by investing in both Paycom Soft and Edgio 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 Edgio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycom Soft and Edgio Inc, you can compare the effects of market volatilities on Paycom Soft and Edgio 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 Edgio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Soft and Edgio.

Diversification Opportunities for Paycom Soft and Edgio

PaycomEdgioDiversified AwayPaycomEdgioDiversified Away100%
-0.72
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Paycom and Edgio is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Edgio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgio Inc 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 Edgio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgio Inc has no effect on the direction of Paycom Soft i.e., Paycom Soft and Edgio go up and down completely randomly.

Pair Corralation between Paycom Soft and Edgio

Given the investment horizon of 90 days Paycom Soft is expected to generate 256.25 times less return on investment than Edgio. But when comparing it to its historical volatility, Paycom Soft is 96.59 times less risky than Edgio. It trades about 0.12 of its potential returns per unit of risk. Edgio Inc is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Edgio Inc on October 27, 2024 and sell it today you would lose (1.00) from holding Edgio Inc or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy30.0%
ValuesDaily Returns

Paycom Soft  vs.  Edgio Inc

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -100-50050
JavaScript chart by amCharts 3.21.15PAYC EGIO
       Timeline  
Paycom Soft 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Paycom Soft exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan170180190200210220230240
Edgio Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Edgio Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak forward indicators, Edgio displayed solid returns over the last few months and may actually be approaching a breakup point.

Paycom Soft and Edgio Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.05-7.52-5.0-2.480.0422.635.317.9910.6713.34 0.0050.0100.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15PAYC EGIO
       Returns  

Pair Trading with Paycom Soft and Edgio

The main advantage of trading using opposite Paycom Soft and Edgio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Soft position performs unexpectedly, Edgio 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 Edgio will offset losses from the drop in Edgio's long position.
The idea behind Paycom Soft and Edgio Inc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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