Correlation Between Paylocity Holdng and EPlus

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

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

Diversification Opportunities for Paylocity Holdng and EPlus

-0.33

Correlation Coefficient

Paylocity Holdng  EPlus

Very good diversification

The 3 months correlation between Paylocity and EPlus is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Paylocity Holdng and ePlus inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ePlus 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 EPlus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ePlus inc has no effect on the direction of Paylocity Holdng i.e., Paylocity Holdng and EPlus go up and down completely randomly.

Pair Corralation between Paylocity Holdng and EPlus

Given the investment horizon of 90 days Paylocity Holdng is expected to generate 0.75 times more return on investment than EPlus. However, Paylocity Holdng is 1.34 times less risky than EPlus. It trades about -0.01 of its potential returns per unit of risk. ePlus inc is currently generating about -0.16 per unit of risk. If you would invest  20,757  in Paylocity Holdng on December 3, 2024 and sell it today you would lose (328.00) from holding Paylocity Holdng or give up 1.58% of portfolio value over 90 days.

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

Paylocity Holdng  vs.  ePlus inc

Paylocity Holdng

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paylocity Holdng has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Paylocity Holdng is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

ePlus inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ePlus inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Paylocity Holdng and EPlus

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

The idea behind Paylocity Holdng and ePlus 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 Stocks Directory module to find actively traded stocks across global markets.