Correlation Between Paycom Software and Seagate Technology

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

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

Diversification Opportunities for Paycom Software and Seagate Technology

0.04

Correlation Coefficient

Paycom Software  Seagate Technology

Significant diversification

The 3 months correlation between Paycom and Seagate is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Paycom Software and Seagate Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology has no effect on the direction of Paycom Software i.e., Paycom Software and Seagate Technology go up and down completely randomly.

Pair Corralation between Paycom Software and Seagate Technology

Assuming the 90 days trading horizon Paycom Software is expected to generate 14.8 times less return on investment than Seagate Technology. But when comparing it to its historical volatility, Paycom Software is 1.68 times less risky than Seagate Technology. It trades about 0.03 of its potential returns per unit of risk. Seagate Technology Holdings is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  39,625  in Seagate Technology Holdings on April 20, 2025 and sell it today you would earn a total of  43,967  from holding Seagate Technology Holdings or generate 110.96% 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.  Seagate Technology Holdings

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.

Seagate Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology Holdings are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seagate Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paycom Software and Seagate Technology

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

The idea behind Paycom Software and Seagate Technology Holdings 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.