Correlation Between Paycom Software and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Paycom Software and Eastman Chemical 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 Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paycom Software and Eastman Chemical, you can compare the effects of market volatilities on Paycom Software and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Software and Eastman Chemical.
Diversification Opportunities for Paycom Software and Eastman Chemical
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Paycom and Eastman is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Paycom Software i.e., Paycom Software and Eastman Chemical go up and down completely randomly.
Pair Corralation between Paycom Software and Eastman Chemical
Assuming the 90 days trading horizon Paycom Software is expected to under-perform the Eastman Chemical. In addition to that, Paycom Software is 3.29 times more volatile than Eastman Chemical. It trades about 0.0 of its total potential returns per unit of risk. Eastman Chemical is currently generating about 0.05 per unit of volatility. If you would invest 22,021 in Eastman Chemical on October 13, 2024 and sell it today you would earn a total of 5,519 from holding Eastman Chemical or generate 25.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 71.14% |
| Values | Daily Returns |
Paycom Software vs. Eastman Chemical
Performance |
| Timeline |
| Paycom Software |
| Eastman Chemical |
Paycom Software and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paycom Software and Eastman Chemical
The main advantage of trading using opposite Paycom Software and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Software position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Paycom Software vs. Tyson Foods | Paycom Software vs. British American Tobacco | Paycom Software vs. DENTSPLY SIRONA | Paycom Software vs. G2D Investments |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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