Correlation Between PayPal Holdings and NIKE
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and NIKE 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 NIKE 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 NIKE Inc CDR, you can compare the effects of market volatilities on PayPal Holdings and NIKE 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 NIKE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and NIKE.
Diversification Opportunities for PayPal Holdings and NIKE
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and NIKE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and NIKE Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc CDR 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 NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc CDR has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and NIKE go up and down completely randomly.
Pair Corralation between PayPal Holdings and NIKE
Assuming the 90 days trading horizon PayPal Holdings CDR is expected to generate 1.04 times more return on investment than NIKE. However, PayPal Holdings is 1.04 times more volatile than NIKE Inc CDR. It trades about 0.3 of its potential returns per unit of risk. NIKE Inc CDR is currently generating about 0.1 per unit of risk. If you would invest 583.00 in PayPal Holdings CDR on August 31, 2024 and sell it today you would earn a total of 65.00 from holding PayPal Holdings CDR or generate 11.15% 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. NIKE Inc CDR
Performance |
| Timeline |
| PayPal Holdings CDR |
| NIKE Inc CDR |
PayPal Holdings and NIKE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and NIKE
The main advantage of trading using opposite PayPal Holdings and NIKE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, NIKE 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 NIKE will offset losses from the drop in NIKE's long position.| PayPal Holdings vs. Constellation Software | PayPal Holdings vs. Highwood Asset Management | PayPal Holdings vs. Rogers Communications | PayPal Holdings vs. Questor Technology |
| NIKE vs. Metalero Mining Corp | NIKE vs. High Liner Foods | NIKE vs. Capstone Mining Corp | NIKE vs. Gfl Environmental Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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