Correlation Between Roper Technologies, and Paylocity Holdng

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

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

Diversification Opportunities for Roper Technologies, and Paylocity Holdng

0.14

Correlation Coefficient

Roper Technologies,  Paylocity Holdng

Average diversification

The 3 months correlation between Roper and Paylocity is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Roper Technologies, and Paylocity Holdng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paylocity Holdng and Roper Technologies, 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 Roper Technologies, are associated (or correlated) with Paylocity Holdng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paylocity Holdng has no effect on the direction of Roper Technologies, i.e., Roper Technologies, and Paylocity Holdng go up and down completely randomly.

Pair Corralation between Roper Technologies, and Paylocity Holdng

Considering the 90-day investment horizon Roper Technologies, is expected to under-perform the Paylocity Holdng. But the stock apears to be less risky and, when comparing its historical volatility, Roper Technologies, is 2.04 times less risky than Paylocity Holdng. The stock trades about -0.52 of its potential returns per unit of risk. The Paylocity Holdng is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  20,278  in Paylocity Holdng on October 15, 2024 and sell it today you would lose (1,135) from holding Paylocity Holdng or give up 5.6% of portfolio value over 90 days.

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

Roper Technologies,  vs.  Paylocity Holdng

Roper Technologies,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies, has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Paylocity Holdng

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Roper Technologies, and Paylocity Holdng

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

The idea behind Roper Technologies, and Paylocity Holdng 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.