Correlation Between BlackRock Health and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both BlackRock Health and PayPal Holdings 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 BlackRock Health and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Health Sciences and PayPal Holdings, you can compare the effects of market volatilities on BlackRock Health and PayPal Holdings 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 BlackRock Health with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Health and PayPal Holdings.
Diversification Opportunities for BlackRock Health and PayPal Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between BlackRock and PayPal is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and BlackRock Health 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 BlackRock Health Sciences are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of BlackRock Health i.e., BlackRock Health and PayPal Holdings go up and down completely randomly.
Pair Corralation between BlackRock Health and PayPal Holdings
Given the investment horizon of 90 days BlackRock Health is expected to generate 3.4 times less return on investment than PayPal Holdings. But when comparing it to its historical volatility, BlackRock Health Sciences is 1.83 times less risky than PayPal Holdings. It trades about 0.14 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 7,930 in PayPal Holdings on September 1, 2024 and sell it today you would earn a total of 747.00 from holding PayPal Holdings or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock Health Sciences vs. PayPal Holdings
Performance |
| Timeline |
| BlackRock Health Sciences |
| PayPal Holdings |
BlackRock Health and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Health and PayPal Holdings
The main advantage of trading using opposite BlackRock Health and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Health position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| BlackRock Health vs. BlackRock Science Tech | BlackRock Health vs. Blackrock Innovation Growth | BlackRock Health vs. Virtus Allianzgi Artificial | BlackRock Health vs. Highland Floating Rate |
| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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