Correlation Between Paycom Soft and First Trust

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

By analyzing existing cross correlation between Paycom Soft and First Trust TCW, you can compare the effects of market volatilities on Paycom Soft and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Soft and First Trust.

Diversification Opportunities for Paycom Soft and First Trust

0.57

Correlation Coefficient

Paycom Soft  First Trust

Very weak diversification

The 3 months correlation between Paycom and First is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of Paycom Soft i.e., Paycom Soft and First Trust go up and down completely randomly.

Pair Corralation between Paycom Soft and First Trust

Given the investment horizon of 90 days Paycom Soft is expected to generate 5.66 times more return on investment than First Trust. However, Paycom Soft is 5.66 times more volatile than First Trust TCW. It trades about 0.07 of its potential returns per unit of risk. First Trust TCW is currently generating about 0.13 per unit of risk. If you would invest  20,873  in Paycom Soft on December 25, 2024 and sell it today you would earn a total of  1,494  from holding Paycom Soft or generate 7.16% return on investment over 90 days.

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

Paycom Soft  vs.  First Trust TCW

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.

First Trust TCW

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust TCW are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, First Trust is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Paycom Soft and First Trust

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

The idea behind Paycom Soft and First Trust TCW 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.