Correlation Between Paylocity Holdng and Paycom Soft

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

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

Diversification Opportunities for Paylocity Holdng and Paycom Soft

0.96

Correlation Coefficient

Paylocity Holdng  Paycom Soft

Almost no diversification

The 3 months correlation between Paylocity and Paycom is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Paylocity Holdng and Paycom Soft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paycom Soft 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 Paycom Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paycom Soft has no effect on the direction of Paylocity Holdng i.e., Paylocity Holdng and Paycom Soft go up and down completely randomly.

Pair Corralation between Paylocity Holdng and Paycom Soft

Given the investment horizon of 90 days Paylocity Holdng is expected to generate 0.67 times more return on investment than Paycom Soft. However, Paylocity Holdng is 1.5 times less risky than Paycom Soft. It trades about 0.03 of its potential returns per unit of risk. Paycom Soft is currently generating about -0.08 per unit of risk. If you would invest  19,528  in Paylocity Holdng on September 21, 2024 and sell it today you would earn a total of  155.00  from holding Paylocity Holdng or generate 0.79% return on investment over 90 days.

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

Paylocity Holdng  vs.  Paycom Soft

Paylocity Holdng

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paylocity Holdng are ranked lower than 12 (%) 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.

Paycom Soft

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Soft are ranked lower than 8 (%) 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.

Pair Trading with Paylocity Holdng and Paycom Soft

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

The idea behind Paylocity Holdng and Paycom Soft 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .