Correlation Between Insperity and Paychex

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

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

Diversification Opportunities for Insperity and Paychex

0.47

Correlation Coefficient

Insperity  Paychex

Very weak diversification

The 3 months correlation between Insperity and Paychex is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Insperity and Paychex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paychex and Insperity 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 Insperity are associated (or correlated) with Paychex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paychex has no effect on the direction of Insperity i.e., Insperity and Paychex go up and down completely randomly.

Pair Corralation between Insperity and Paychex

Considering the 90-day investment horizon Insperity is expected to generate 1.75 times more return on investment than Paychex. However, Insperity is 1.75 times more volatile than Paychex. It trades about 0.05 of its potential returns per unit of risk. Paychex is currently generating about 0.02 per unit of risk. If you would invest  7,822  in Insperity on January 16, 2025 and sell it today you would earn a total of  507.00  from holding Insperity or generate 6.48% return on investment over 90 days.

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

Insperity  vs.  Paychex

Insperity

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Insperity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Insperity may actually be approaching a critical reversion point that can send shares even higher in May 2025.

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

Pair Trading with Insperity and Paychex

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

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