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

0.15

Correlation Coefficient

Paycom Software  American Express

Average diversification

The 3 months correlation between Paycom and American is 0.15. 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 4.97 times less return on investment than American Express. But when comparing it to its historical volatility, Paycom Software is 1.23 times less risky than American Express. It trades about 0.02 of its potential returns per unit of risk. American Express is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  14,818  in American Express on April 23, 2025 and sell it today you would earn a total of  2,182  from holding American Express or generate 14.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Paycom Software  vs.  American Express

Paycom Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Paycom Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

American Express

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, American Express sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Paycom Software and American Express 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..