Correlation Between Pfizer and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Pfizer 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 Pfizer and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pfizer Inc and PayPal Holdings, you can compare the effects of market volatilities on Pfizer 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 Pfizer with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pfizer and PayPal Holdings.
Diversification Opportunities for Pfizer and PayPal Holdings
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pfizer and PayPal is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Pfizer Inc and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and Pfizer 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 Pfizer Inc 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 Pfizer i.e., Pfizer and PayPal Holdings go up and down completely randomly.
Pair Corralation between Pfizer and PayPal Holdings
Considering the 90-day investment horizon Pfizer Inc is expected to under-perform the PayPal Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Pfizer Inc is 1.37 times less risky than PayPal Holdings. The stock trades about -0.02 of its potential returns per unit of risk. The PayPal Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,462 in PayPal Holdings on September 1, 2024 and sell it today you would earn a total of 3,215 from holding PayPal Holdings or generate 58.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pfizer Inc vs. PayPal Holdings
Performance |
| Timeline |
| Pfizer Inc |
| PayPal Holdings |
Pfizer and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pfizer and PayPal Holdings
The main advantage of trading using opposite Pfizer and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pfizer 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.| Pfizer vs. Crinetics Pharmaceuticals | Pfizer vs. Enanta Pharmaceuticals | Pfizer vs. Amicus Therapeutics | Pfizer vs. Connect Biopharma Holdings |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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