Correlation Between STORE ELECTRONIC and Paychex

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

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

Diversification Opportunities for STORE ELECTRONIC and Paychex

-0.81

Correlation Coefficient

STORE ELECTRONIC  Paychex

Pay attention - limited upside

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

Pair Corralation between STORE ELECTRONIC and Paychex

Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.66 times more return on investment than Paychex. However, STORE ELECTRONIC is 1.66 times more volatile than Paychex. It trades about -0.06 of its potential returns per unit of risk. Paychex is currently generating about -0.1 per unit of risk. If you would invest  13,740  in STORE ELECTRONIC on September 15, 2024 and sell it today you would lose (390.00) from holding STORE ELECTRONIC or give up 2.84% of portfolio value over 90 days.

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

STORE ELECTRONIC  vs.  Paychex

STORE ELECTRONIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STORE ELECTRONIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Paychex

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Paychex may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with STORE ELECTRONIC and Paychex

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

The idea behind STORE ELECTRONIC and Paychex 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.