Correlation Between Maple Leaf and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Maple Leaf 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 Maple Leaf and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maple Leaf Foods and PayPal Holdings CDR, you can compare the effects of market volatilities on Maple Leaf 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 Maple Leaf with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maple Leaf and PayPal Holdings.
Diversification Opportunities for Maple Leaf and PayPal Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maple and PayPal is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Maple Leaf Foods and PayPal Holdings CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings CDR and Maple Leaf 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 Maple Leaf Foods 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 CDR has no effect on the direction of Maple Leaf i.e., Maple Leaf and PayPal Holdings go up and down completely randomly.
Pair Corralation between Maple Leaf and PayPal Holdings
Assuming the 90 days trading horizon Maple Leaf is expected to generate 3.16 times less return on investment than PayPal Holdings. In addition to that, Maple Leaf is 1.34 times more volatile than PayPal Holdings CDR. It trades about 0.03 of its total potential returns per unit of risk. PayPal Holdings CDR is currently generating about 0.15 per unit of volatility. If you would invest 644.00 in PayPal Holdings CDR on September 13, 2024 and sell it today you would earn a total of 33.00 from holding PayPal Holdings CDR or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maple Leaf Foods vs. PayPal Holdings CDR
Performance |
| Timeline |
| Maple Leaf Foods |
| PayPal Holdings CDR |
Maple Leaf and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maple Leaf and PayPal Holdings
The main advantage of trading using opposite Maple Leaf and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maple Leaf 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.| Maple Leaf vs. Saputo Inc | Maple Leaf vs. George Weston Limited | Maple Leaf vs. Empire Company Limited | Maple Leaf vs. Premium Brands Holdings |
| PayPal Holdings vs. DRI Healthcare Trust | PayPal Holdings vs. Maple Leaf Foods | PayPal Holdings vs. SPoT Coffee | PayPal Holdings vs. UnitedHealth Group CDR |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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