Correlation Between Paycom Software and American Express
Can any of the company-specific risk be diversified away by investing in both Paycom Software and American Express 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 American Express into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycom Software and American Express, you can compare the effects of market volatilities on Paycom Software and American Express 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 American Express. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Software and American Express.
Diversification Opportunities for Paycom Software and American Express
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Paycom and American is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express 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 American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Paycom Software i.e., Paycom Software and American Express go up and down completely randomly.
Pair Corralation between Paycom Software and American Express
Assuming the 90 days trading horizon Paycom Software is expected to generate 1.75 times more return on investment than American Express. However, Paycom Software is 1.75 times more volatile than American Express. It trades about 0.15 of its potential returns per unit of risk. American Express is currently generating about 0.15 per unit of risk. If you would invest 2,613 in Paycom Software on October 1, 2024 and sell it today you would earn a total of 1,977 from holding Paycom Software or generate 75.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 97.6% |
| Values | Daily Returns |
Paycom Software vs. American Express
Performance |
| Timeline |
| Paycom Software |
| American Express |
Paycom Software and American Express Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paycom Software and American Express
The main advantage of trading using opposite Paycom Software and American Express positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Software position performs unexpectedly, American Express 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 American Express will offset losses from the drop in American Express' long position.| Paycom Software vs. Mliuz SA | Paycom Software vs. Bemobi Mobile Tech | Paycom Software vs. Infracommerce CXaaS SA | Paycom Software vs. Enjoei SA |
| American Express vs. Agilent Technologies | American Express vs. Dell Technologies | American Express vs. Metalrgica Riosulense SA | American Express vs. Cognizant Technology Solutions |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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