Correlation Between Paycom Soft and Wag Group

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

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

Diversification Opportunities for Paycom Soft and Wag Group

-0.56

Correlation Coefficient

Paycom Soft  Wag Group

Excellent diversification

The 3 months correlation between Paycom and Wag is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Soft and Wag Group Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wag Group 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 Wag Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wag Group has no effect on the direction of Paycom Soft i.e., Paycom Soft and Wag Group go up and down completely randomly.

Pair Corralation between Paycom Soft and Wag Group

Given the investment horizon of 90 days Paycom Soft is expected to generate 1.54 times less return on investment than Wag Group. But when comparing it to its historical volatility, Paycom Soft is 13.7 times less risky than Wag Group. It trades about 0.21 of its potential returns per unit of risk. Wag Group Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.47  in Wag Group Co on September 5, 2024 and sell it today you would lose (0.97) from holding Wag Group Co or give up 39.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Paycom Soft  vs.  Wag Group Co

Paycom Soft

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 16 (%) 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.

Wag Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wag Group Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Wag Group is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Paycom Soft and Wag Group

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

The idea behind Paycom Soft and Wag Group Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.