Correlation Between Paychex and Adecco

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

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

Diversification Opportunities for Paychex and Adecco

-0.75

Correlation Coefficient

Paychex  Adecco

Pay attention - limited upside

The 3 months correlation between Paychex and Adecco is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Paychex and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and Paychex 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 Paychex are associated (or correlated) with Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of Paychex i.e., Paychex and Adecco go up and down completely randomly.

Pair Corralation between Paychex and Adecco

Given the investment horizon of 90 days Paychex is expected to generate 0.71 times more return on investment than Adecco. However, Paychex is 1.42 times less risky than Adecco. It trades about 0.14 of its potential returns per unit of risk. Adecco Group is currently generating about -0.19 per unit of risk. If you would invest  13,106  in Paychex on September 2, 2024 and sell it today you would earn a total of  1,521  from holding Paychex or generate 11.61% return on investment over 90 days.

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

Paychex  vs.  Adecco Group

Paychex

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Paychex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Paychex and Adecco

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

The idea behind Paychex and Adecco Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.