Correlation Between Paychex and TrueBlue

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

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

Diversification Opportunities for Paychex and TrueBlue

0.07

Correlation Coefficient

Paychex  TrueBlue

Significant diversification

The 3 months correlation between Paychex and TrueBlue is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Paychex and TrueBlue in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrueBlue 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 TrueBlue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrueBlue has no effect on the direction of Paychex i.e., Paychex and TrueBlue go up and down completely randomly.

Pair Corralation between Paychex and TrueBlue

Given the investment horizon of 90 days Paychex is expected to generate 0.62 times more return on investment than TrueBlue. However, Paychex is 1.62 times less risky than TrueBlue. It trades about -0.08 of its potential returns per unit of risk. TrueBlue is currently generating about -0.11 per unit of risk. If you would invest  12,477  in Paychex on March 12, 2024 and sell it today you would lose (219.00) from holding Paychex or give up 1.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Paychex  vs.  TrueBlue

Paychex

Risk-Adjusted Performance

1 of 100

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. In spite of fairly strong basic indicators, Paychex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

TrueBlue

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TrueBlue has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, TrueBlue is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Paychex and TrueBlue

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

The idea behind Paychex and TrueBlue 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.