Correlation Between Paycom Soft and Hartford Small

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

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

Diversification Opportunities for Paycom Soft and Hartford Small

-0.37

Correlation Coefficient

Paycom Soft  Hartford Small

Very good diversification

The 3 months correlation between Paycom and Hartford is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Hartford Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small Pany 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 Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small Pany has no effect on the direction of Paycom Soft i.e., Paycom Soft and Hartford Small go up and down completely randomly.

Pair Corralation between Paycom Soft and Hartford Small

Given the investment horizon of 90 days Paycom Soft is expected to generate 1.39 times more return on investment than Hartford Small. However, Paycom Soft is 1.39 times more volatile than Hartford Small Pany. It trades about 0.08 of its potential returns per unit of risk. Hartford Small Pany is currently generating about -0.08 per unit of risk. If you would invest  20,636  in Paycom Soft on December 27, 2024 and sell it today you would earn a total of  1,636  from holding Paycom Soft or generate 7.93% return on investment over 90 days.

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

Paycom Soft  vs.  Hartford Small Pany

Paycom Soft

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 6 (%) 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.

Hartford Small Pany

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hartford Small Pany has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Paycom Soft and Hartford Small

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

The idea behind Paycom Soft and Hartford Small Pany 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.