Correlation Between PayPal Holdings and BYD Company
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and BYD Company 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 PayPal Holdings and BYD Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and BYD Company Limited, you can compare the effects of market volatilities on PayPal Holdings and BYD Company 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 PayPal Holdings with a short position of BYD Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and BYD Company.
Diversification Opportunities for PayPal Holdings and BYD Company
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and BYD is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and BYD Company Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Limited and PayPal Holdings 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 PayPal Holdings are associated (or correlated) with BYD Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Limited has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and BYD Company go up and down completely randomly.
Pair Corralation between PayPal Holdings and BYD Company
Assuming the 90 days horizon PayPal Holdings is expected to generate 1.44 times more return on investment than BYD Company. However, PayPal Holdings is 1.44 times more volatile than BYD Company Limited. It trades about 0.11 of its potential returns per unit of risk. BYD Company Limited is currently generating about -0.26 per unit of risk. If you would invest 7,868 in PayPal Holdings on August 29, 2024 and sell it today you would earn a total of 426.00 from holding PayPal Holdings or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. BYD Company Limited
Performance |
| Timeline |
| PayPal Holdings |
| BYD Limited |
PayPal Holdings and BYD Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and BYD Company
The main advantage of trading using opposite PayPal Holdings and BYD Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, BYD Company 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 BYD Company will offset losses from the drop in BYD Company's long position.| PayPal Holdings vs. Superior Plus Corp | PayPal Holdings vs. NMI Holdings | PayPal Holdings vs. Origin Agritech | PayPal Holdings vs. SIVERS SEMICONDUCTORS AB |
| BYD Company vs. Xiaomi | BYD Company vs. Geely Automobile Holdings | BYD Company vs. Nel ASA | BYD Company vs. JinkoSolar Holding Co |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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