Correlation Between Paylocity Holdng and Progress Software

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

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

Diversification Opportunities for Paylocity Holdng and Progress Software

0.51

Correlation Coefficient

Paylocity Holdng  Progress Software

Very weak diversification

The 3 months correlation between Paylocity and Progress is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Paylocity Holdng and Progress Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progress Software 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 Progress Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progress Software has no effect on the direction of Paylocity Holdng i.e., Paylocity Holdng and Progress Software go up and down completely randomly.

Pair Corralation between Paylocity Holdng and Progress Software

Given the investment horizon of 90 days Paylocity Holdng is expected to generate 1.18 times more return on investment than Progress Software. However, Paylocity Holdng is 1.18 times more volatile than Progress Software. It trades about 0.13 of its potential returns per unit of risk. Progress Software is currently generating about 0.07 per unit of risk. If you would invest  14,679  in Paylocity Holdng on October 21, 2024 and sell it today you would earn a total of  5,021  from holding Paylocity Holdng or generate 34.21% 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.  Progress Software

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.

Progress Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Progress Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Progress Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Paylocity Holdng and Progress Software

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

The idea behind Paylocity Holdng and Progress Software 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.