Correlation Between Paycom Software and Agilent Technologies
Can any of the company-specific risk be diversified away by investing in both Paycom Software and Agilent Technologies 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 Paycom Software and Agilent Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycom Software and Agilent Technologies, you can compare the effects of market volatilities on Paycom Software and Agilent Technologies 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 Paycom Software with a short position of Agilent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Software and Agilent Technologies.
Diversification Opportunities for Paycom Software and Agilent Technologies
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Paycom and Agilent is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and Agilent Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agilent Technologies and Paycom Software 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 Paycom Software are associated (or correlated) with Agilent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agilent Technologies has no effect on the direction of Paycom Software i.e., Paycom Software and Agilent Technologies go up and down completely randomly.
Pair Corralation between Paycom Software and Agilent Technologies
Assuming the 90 days trading horizon Paycom Software is expected to generate 3.22 times more return on investment than Agilent Technologies. However, Paycom Software is 3.22 times more volatile than Agilent Technologies. It trades about 0.24 of its potential returns per unit of risk. Agilent Technologies is currently generating about -0.05 per unit of risk. If you would invest 3,072 in Paycom Software on August 23, 2024 and sell it today you would earn a total of 1,112 from holding Paycom Software or generate 36.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paycom Software vs. Agilent Technologies
Performance |
| Timeline |
| Paycom Software |
| Agilent Technologies |
Paycom Software and Agilent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paycom Software and Agilent Technologies
The main advantage of trading using opposite Paycom Software and Agilent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Software position performs unexpectedly, Agilent Technologies 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 Agilent Technologies will offset losses from the drop in Agilent Technologies' long position.| Paycom Software vs. Verizon Communications | Paycom Software vs. Charter Communications | Paycom Software vs. Beyond Meat | Paycom Software vs. Tyson Foods |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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