Correlation Between EGain and Paylocity Holdng
Can any of the company-specific risk be diversified away by investing in both EGain 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 EGain and Paylocity Holdng into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eGain and Paylocity Holdng, you can compare the effects of market volatilities on EGain 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 EGain with a short position of Paylocity Holdng. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGain and Paylocity Holdng.
Diversification Opportunities for EGain and Paylocity Holdng
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between EGain and Paylocity is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding eGain and Paylocity Holdng in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paylocity Holdng and EGain 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 eGain 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 EGain i.e., EGain and Paylocity Holdng go up and down completely randomly.
Pair Corralation between EGain and Paylocity Holdng
Given the investment horizon of 90 days eGain is expected to under-perform the Paylocity Holdng. In addition to that, EGain is 1.58 times more volatile than Paylocity Holdng. It trades about -0.02 of its total potential returns per unit of risk. Paylocity Holdng is currently generating about 0.07 per unit of volatility. If you would invest 14,965 in Paylocity Holdng on August 24, 2024 and sell it today you would earn a total of 5,306 from holding Paylocity Holdng or generate 35.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
eGain vs. Paylocity Holdng
Performance |
| Timeline |
| eGain |
| Paylocity Holdng |
EGain and Paylocity Holdng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EGain and Paylocity Holdng
The main advantage of trading using opposite EGain and Paylocity Holdng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGain 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 eGain 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.| Paylocity Holdng vs. Alkami Technology | Paylocity Holdng vs. Paycor HCM | Paylocity Holdng vs. Procore Technologies | Paylocity Holdng vs. Enfusion |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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