Correlation Between Omnia Wellness and Paychex

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Can any of the company-specific risk be diversified away by investing in both Omnia Wellness 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 Omnia Wellness and Paychex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Omnia Wellness and Paychex, you can compare the effects of market volatilities on Omnia Wellness 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 Omnia Wellness with a short position of Paychex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Omnia Wellness and Paychex.

Diversification Opportunities for Omnia Wellness and Paychex

-0.45
  Correlation Coefficient

Very good diversification

The 3 months correlation between Omnia and Paychex is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Omnia Wellness and Paychex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paychex and Omnia Wellness 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 Omnia Wellness 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 Omnia Wellness i.e., Omnia Wellness and Paychex go up and down completely randomly.

Pair Corralation between Omnia Wellness and Paychex

Given the investment horizon of 90 days Omnia Wellness is expected to generate 13.43 times more return on investment than Paychex. However, Omnia Wellness is 13.43 times more volatile than Paychex. It trades about 0.07 of its potential returns per unit of risk. Paychex is currently generating about 0.06 per unit of risk. If you would invest  20.00  in Omnia Wellness on July 5, 2022 and sell it today you would lose (8.00)  from holding Omnia Wellness or give up 40.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Omnia Wellness  vs.  Paychex

 Performance (%) 
       Timeline  
Omnia Wellness 
Omnia Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Wellness are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Omnia Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Omnia Price Channel

Paychex 
Paychex Performance
0 of 100
Over the last 90 days Paychex has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Paychex Price Channel

Omnia Wellness and Paychex Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Omnia Wellness and Paychex

The main advantage of trading using opposite Omnia Wellness and Paychex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Omnia Wellness 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.
Omnia Wellness vs. Amazon Inc
The idea behind Omnia Wellness 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.
Paychex vs. Amazon Inc
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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