Correlation Between PayPal Holdings and Cargojet
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Cargojet 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 Cargojet 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 Cargojet, you can compare the effects of market volatilities on PayPal Holdings and Cargojet 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 Cargojet. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Cargojet.
Diversification Opportunities for PayPal Holdings and Cargojet
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Cargojet is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and Cargojet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargojet 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 Cargojet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargojet has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Cargojet go up and down completely randomly.
Pair Corralation between PayPal Holdings and Cargojet
Assuming the 90 days trading horizon PayPal Holdings is expected to generate 2.79 times less return on investment than Cargojet. In addition to that, PayPal Holdings is 1.17 times more volatile than Cargojet. It trades about 0.16 of its total potential returns per unit of risk. Cargojet is currently generating about 0.53 per unit of volatility. If you would invest 10,419 in Cargojet on October 22, 2024 and sell it today you would earn a total of 1,836 from holding Cargojet or generate 17.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings CDR vs. Cargojet
Performance |
| Timeline |
| PayPal Holdings CDR |
| Cargojet |
PayPal Holdings and Cargojet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Cargojet
The main advantage of trading using opposite PayPal Holdings and Cargojet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Cargojet 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 Cargojet will offset losses from the drop in Cargojet's long position.| PayPal Holdings vs. Rocky Mountain Liquor | PayPal Holdings vs. Aya Gold Silver | PayPal Holdings vs. Millennium Silver Corp | PayPal Holdings vs. Endeavour Silver Corp |
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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