Correlation Between Paycom Software and Broadridge Financial

Can any of the company-specific risk be diversified away by investing in both Paycom Software and Broadridge Financial 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 Broadridge Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Paycom Software and Broadridge Financial Solutions,, you can compare the effects of market volatilities on Paycom Software and Broadridge Financial 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 Broadridge Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paycom Software and Broadridge Financial.

Diversification Opportunities for Paycom Software and Broadridge Financial

-0.26

Correlation Coefficient

Paycom Software  Broadridge Financial

Very good diversification

The 3 months correlation between Paycom and Broadridge is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and Broadridge Financial Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadridge Financial 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 Broadridge Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadridge Financial has no effect on the direction of Paycom Software i.e., Paycom Software and Broadridge Financial go up and down completely randomly.

Pair Corralation between Paycom Software and Broadridge Financial

Assuming the 90 days trading horizon Paycom Software is expected to generate 10.97 times more return on investment than Broadridge Financial. However, Paycom Software is 10.97 times more volatile than Broadridge Financial Solutions,. It trades about 0.03 of its potential returns per unit of risk. Broadridge Financial Solutions, is currently generating about 0.13 per unit of risk. If you would invest  4,052  in Paycom Software on April 20, 2025 and sell it today you would earn a total of  143.00  from holding Paycom Software or generate 3.53% return on investment over 90 days.

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

Paycom Software  vs.  Broadridge Financial Solutions

Paycom Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Paycom Software are ranked lower than 2 (%) 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.

Broadridge Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadridge Financial Solutions, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Broadridge Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Paycom Software and Broadridge Financial

The main advantage of trading using opposite Paycom Software and Broadridge Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paycom Software position performs unexpectedly, Broadridge Financial 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 Broadridge Financial will offset losses from the drop in Broadridge Financial's long position.

The idea behind Paycom Software and Broadridge Financial Solutions, 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.