Correlation Between Pembina Pipeline and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Pembina Pipeline 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 Pembina Pipeline and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembina Pipeline Corp and PayPal Holdings CDR, you can compare the effects of market volatilities on Pembina Pipeline 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 Pembina Pipeline with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembina Pipeline and PayPal Holdings.
Diversification Opportunities for Pembina Pipeline and PayPal Holdings
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pembina and PayPal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Pembina Pipeline Corp 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 Pembina Pipeline 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 Pembina Pipeline Corp 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 Pembina Pipeline i.e., Pembina Pipeline and PayPal Holdings go up and down completely randomly.
Pair Corralation between Pembina Pipeline and PayPal Holdings
Assuming the 90 days trading horizon Pembina Pipeline is expected to generate 1.44 times less return on investment than PayPal Holdings. But when comparing it to its historical volatility, Pembina Pipeline Corp is 2.14 times less risky than PayPal Holdings. It trades about 0.22 of its potential returns per unit of risk. PayPal Holdings CDR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 578.00 in PayPal Holdings CDR on August 26, 2024 and sell it today you would earn a total of 67.00 from holding PayPal Holdings CDR or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembina Pipeline Corp vs. PayPal Holdings CDR
Performance |
| Timeline |
| Pembina Pipeline Corp |
| PayPal Holdings CDR |
Pembina Pipeline and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembina Pipeline and PayPal Holdings
The main advantage of trading using opposite Pembina Pipeline and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembina Pipeline 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.| Pembina Pipeline vs. Labrador Iron Ore | Pembina Pipeline vs. Maple Peak Investments | Pembina Pipeline vs. Datable Technology Corp | Pembina Pipeline vs. Storage Vault Canada |
| PayPal Holdings vs. Orbit Garant Drilling | PayPal Holdings vs. Pembina Pipeline Corp | PayPal Holdings vs. Stampede Drilling | PayPal Holdings vs. Wishpond Technologies |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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