Correlation Between Paylocity Holdng and Braze

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

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

Diversification Opportunities for Paylocity Holdng and Braze

0.59

Correlation Coefficient

Paylocity Holdng  Braze

Very weak diversification

The 3 months correlation between Paylocity and Braze is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Paylocity Holdng and Braze Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Braze Inc 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 Braze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Braze Inc has no effect on the direction of Paylocity Holdng i.e., Paylocity Holdng and Braze go up and down completely randomly.

Pair Corralation between Paylocity Holdng and Braze

Given the investment horizon of 90 days Paylocity Holdng is expected to generate 2.74 times less return on investment than Braze. But when comparing it to its historical volatility, Paylocity Holdng is 1.24 times less risky than Braze. It trades about 0.12 of its potential returns per unit of risk. Braze Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,078  in Braze Inc on October 24, 2024 and sell it today you would earn a total of  1,333  from holding Braze Inc or generate 43.31% return on investment over 90 days.

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

Paylocity Holdng  vs.  Braze Inc

Paylocity Holdng

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paylocity Holdng are ranked lower than 9 (%) 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.

Braze Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Braze Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Braze exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paylocity Holdng and Braze

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

The idea behind Paylocity Holdng and Braze Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.