Correlation Between Secureworks Corp and Payfare

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

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

Diversification Opportunities for Secureworks Corp and Payfare

-0.55

Correlation Coefficient

Secureworks Corp  Payfare

Excellent diversification

The 3 months correlation between Secureworks and Payfare is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Secureworks Corp and Payfare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payfare and Secureworks Corp 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 Secureworks Corp are associated (or correlated) with Payfare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payfare has no effect on the direction of Secureworks Corp i.e., Secureworks Corp and Payfare go up and down completely randomly.

Pair Corralation between Secureworks Corp and Payfare

Given the investment horizon of 90 days Secureworks Corp is expected to generate 0.34 times more return on investment than Payfare. However, Secureworks Corp is 2.96 times less risky than Payfare. It trades about 0.02 of its potential returns per unit of risk. Payfare is currently generating about -0.13 per unit of risk. If you would invest  834.00  in Secureworks Corp on August 30, 2024 and sell it today you would earn a total of  4.00  from holding Secureworks Corp or generate 0.48% return on investment over 90 days.

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

Secureworks Corp  vs.  Payfare

Secureworks Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Secureworks Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Secureworks Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Payfare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payfare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Secureworks Corp and Payfare

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

The idea behind Secureworks Corp and Payfare 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.