Correlation Between Paycom Software and British American
Can any of the company-specific risk be diversified away by investing in both Paycom Software and British American 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 British American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycom Software and British American Tobacco, you can compare the effects of market volatilities on Paycom Software and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Software and British American.
Diversification Opportunities for Paycom Software and British American
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Paycom and British is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of Paycom Software i.e., Paycom Software and British American go up and down completely randomly.
Pair Corralation between Paycom Software and British American
Assuming the 90 days trading horizon Paycom Software is expected to generate 5.21 times less return on investment than British American. In addition to that, Paycom Software is 2.81 times more volatile than British American Tobacco. It trades about 0.01 of its total potential returns per unit of risk. British American Tobacco is currently generating about 0.08 per unit of volatility. If you would invest 2,855 in British American Tobacco on August 28, 2024 and sell it today you would earn a total of 1,496 from holding British American Tobacco or generate 52.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 58.47% |
| Values | Daily Returns |
Paycom Software vs. British American Tobacco
Performance |
| Timeline |
| Paycom Software |
| British American Tobacco |
Paycom Software and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paycom Software and British American
The main advantage of trading using opposite Paycom Software and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Software position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| Paycom Software vs. Mliuz SA | Paycom Software vs. Bemobi Mobile Tech | Paycom Software vs. Enjoei SA | Paycom Software vs. Fras le SA |
| British American vs. Fras le SA | British American vs. Clave Indices De | British American vs. BTG Pactual Logstica | British American vs. Telefonaktiebolaget LM Ericsson |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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