Correlation Between PayPal Holdings and Altagas
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Altagas 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 Altagas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings CDR and Altagas Ltd Pref, you can compare the effects of market volatilities on PayPal Holdings and Altagas 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 Altagas. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Altagas.
Diversification Opportunities for PayPal Holdings and Altagas
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Altagas is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and Altagas Ltd Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altagas Pref 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 CDR are associated (or correlated) with Altagas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altagas Pref has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Altagas go up and down completely randomly.
Pair Corralation between PayPal Holdings and Altagas
Assuming the 90 days trading horizon PayPal Holdings CDR is expected to generate 3.4 times more return on investment than Altagas. However, PayPal Holdings is 3.4 times more volatile than Altagas Ltd Pref. It trades about 0.09 of its potential returns per unit of risk. Altagas Ltd Pref is currently generating about 0.14 per unit of risk. If you would invest 624.00 in PayPal Holdings CDR on August 28, 2024 and sell it today you would earn a total of 22.00 from holding PayPal Holdings CDR or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings CDR vs. Altagas Ltd Pref
Performance |
| Timeline |
| PayPal Holdings CDR |
| Altagas Pref |
PayPal Holdings and Altagas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Altagas
The main advantage of trading using opposite PayPal Holdings and Altagas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Altagas 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 Altagas will offset losses from the drop in Altagas' long position.| PayPal Holdings vs. Brookfield Investments | PayPal Holdings vs. SPoT Coffee | PayPal Holdings vs. Wilmington Capital Management | PayPal Holdings vs. Data Communications Management |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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