Correlation Between PayPal Holdings and Grenke AG
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Grenke AG 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 Grenke AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Grenke AG, you can compare the effects of market volatilities on PayPal Holdings and Grenke AG 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 Grenke AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Grenke AG.
Diversification Opportunities for PayPal Holdings and Grenke AG
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Grenke is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Grenke AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grenke AG 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 Grenke AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grenke AG has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Grenke AG go up and down completely randomly.
Pair Corralation between PayPal Holdings and Grenke AG
Assuming the 90 days horizon PayPal Holdings is expected to generate 0.52 times more return on investment than Grenke AG. However, PayPal Holdings is 1.91 times less risky than Grenke AG. It trades about 0.15 of its potential returns per unit of risk. Grenke AG is currently generating about -0.25 per unit of risk. If you would invest 7,390 in PayPal Holdings on September 13, 2024 and sell it today you would earn a total of 1,007 from holding PayPal Holdings or generate 13.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
PayPal Holdings vs. Grenke AG
Performance |
| Timeline |
| PayPal Holdings |
| Grenke AG |
PayPal Holdings and Grenke AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Grenke AG
The main advantage of trading using opposite PayPal Holdings and Grenke AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Grenke AG 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 Grenke AG will offset losses from the drop in Grenke AG's long position.| PayPal Holdings vs. Microsoft | PayPal Holdings vs. NVIDIA | PayPal Holdings vs. Amazon Inc | PayPal Holdings vs. Square Inc |
| Grenke AG vs. Bumrungrad Hospital Public | Grenke AG vs. ATRYS HEALTH SA | Grenke AG vs. Spirent Communications plc | Grenke AG vs. EHEALTH |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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