Correlation Between Paychex and Rollins

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

By analyzing existing cross correlation between Paychex and Rollins, you can compare the effects of market volatilities on Paychex and Rollins 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 Paychex with a short position of Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paychex and Rollins.

Diversification Opportunities for Paychex and Rollins

0.89

Correlation Coefficient

Paychex  Rollins

Very poor diversification

The 3 months correlation between Paychex and Rollins is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Paychex and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins and Paychex 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 Paychex are associated (or correlated) with Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of Paychex i.e., Paychex and Rollins go up and down completely randomly.

Pair Corralation between Paychex and Rollins

Assuming the 90 days horizon Paychex is expected to generate 1.41 times more return on investment than Rollins. However, Paychex is 1.41 times more volatile than Rollins. It trades about 0.02 of its potential returns per unit of risk. Rollins is currently generating about 0.0 per unit of risk. If you would invest  12,255  in Paychex on April 24, 2025 and sell it today you would earn a total of  111.00  from holding Paychex or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Paychex  vs.  Rollins

Paychex

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Paychex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Rollins

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rollins has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rollins is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Paychex and Rollins

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

The idea behind Paychex and Rollins 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.