Correlation Between Paylocity Holdng and Autodesk

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

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

Diversification Opportunities for Paylocity Holdng and Autodesk

0.88

Correlation Coefficient

Paylocity Holdng  Autodesk

Very poor diversification

The 3 months correlation between Paylocity and Autodesk is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Paylocity Holdng and Autodesk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autodesk and Paylocity Holdng 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 Paylocity Holdng are associated (or correlated) with Autodesk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autodesk has no effect on the direction of Paylocity Holdng i.e., Paylocity Holdng and Autodesk go up and down completely randomly.

Pair Corralation between Paylocity Holdng and Autodesk

Given the investment horizon of 90 days Paylocity Holdng is expected to under-perform the Autodesk. But the stock apears to be less risky and, when comparing its historical volatility, Paylocity Holdng is 1.55 times less risky than Autodesk. The stock trades about -0.16 of its potential returns per unit of risk. The Autodesk is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  31,796  in Autodesk on September 27, 2024 and sell it today you would lose (1,673) from holding Autodesk or give up 5.26% of portfolio value over 90 days.

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

Paylocity Holdng  vs.  Autodesk

Paylocity Holdng

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paylocity Holdng are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Paylocity Holdng showed solid returns over the last few months and may actually be approaching a breakup point.

Autodesk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Autodesk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Autodesk may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Paylocity Holdng and Autodesk

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

The idea behind Paylocity Holdng and Autodesk 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 Transaction History module to view history of all your transactions and understand their impact on performance.