Correlation Between Paycor HCM and Model N

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

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

Diversification Opportunities for Paycor HCM and Model N

-0.79

Correlation Coefficient

Paycor HCM  Model N

Pay attention - limited upside

The 3 months correlation between Paycor and Model is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Paycor HCM and Model N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Model N and Paycor HCM 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 Paycor HCM are associated (or correlated) with Model N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Model N has no effect on the direction of Paycor HCM i.e., Paycor HCM and Model N go up and down completely randomly.

Pair Corralation between Paycor HCM and Model N

Given the investment horizon of 90 days Paycor HCM is expected to under-perform the Model N. But the stock apears to be less risky and, when comparing its historical volatility, Paycor HCM is 1.38 times less risky than Model N. The stock trades about -0.15 of its potential returns per unit of risk. The Model N is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,711  in Model N on February 2, 2024 and sell it today you would earn a total of  259.00  from holding Model N or generate 9.55% return on investment over 90 days.

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

Paycor HCM  vs.  Model N

Paycor HCM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paycor HCM has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Model N

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Model N are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Model N may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Paycor HCM and Model N

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

The idea behind Paycor HCM and Model N 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 Stocks Directory module to find actively traded stocks across global markets.