Correlation Between Paylocity Holdng and PTC

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

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

Diversification Opportunities for Paylocity Holdng and PTC

0.81

Correlation Coefficient

Paylocity Holdng  PTC

Very poor diversification

The 3 months correlation between Paylocity and PTC is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Paylocity Holdng and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC 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 PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Paylocity Holdng i.e., Paylocity Holdng and PTC go up and down completely randomly.

Pair Corralation between Paylocity Holdng and PTC

Given the investment horizon of 90 days Paylocity Holdng is expected to generate 1.26 times more return on investment than PTC. However, Paylocity Holdng is 1.26 times more volatile than PTC Inc. It trades about -0.24 of its potential returns per unit of risk. PTC Inc is currently generating about -0.4 per unit of risk. If you would invest  20,971  in Paylocity Holdng on October 5, 2024 and sell it today you would lose (1,464) from holding Paylocity Holdng or give up 6.98% 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.  PTC Inc

Paylocity Holdng

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paylocity Holdng are ranked lower than 11 (%) 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.

PTC Inc

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PTC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Paylocity Holdng and PTC

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

The idea behind Paylocity Holdng and PTC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.