Correlation Between Workday and Ceridian HCM

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

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

Diversification Opportunities for Workday and Ceridian HCM

0.67

Correlation Coefficient

Workday  Ceridian HCM

Poor diversification

The 3 months correlation between Workday and Ceridian is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Workday and Ceridian HCM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceridian HCM Holding and Workday 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 Workday are associated (or correlated) with Ceridian HCM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceridian HCM Holding has no effect on the direction of Workday i.e., Workday and Ceridian HCM go up and down completely randomly.

Pair Corralation between Workday and Ceridian HCM

If you would invest  22,472  in Workday on September 27, 2024 and sell it today you would earn a total of  4,432  from holding Workday or generate 19.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	0.8%
Values	Daily Returns

Workday  vs.  Ceridian HCM Holding

Workday

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Workday are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Workday may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ceridian HCM Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ceridian HCM Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Ceridian HCM is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Workday and Ceridian HCM

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

The idea behind Workday and Ceridian HCM Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.