Correlation Between PayPal Holdings and Targa Resources
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Targa Resources 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 Targa Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Targa Resources Corp, you can compare the effects of market volatilities on PayPal Holdings and Targa Resources 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 Targa Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Targa Resources.
Diversification Opportunities for PayPal Holdings and Targa Resources
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Targa is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Targa Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Targa Resources Corp 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 are associated (or correlated) with Targa Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Targa Resources Corp has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Targa Resources go up and down completely randomly.
Pair Corralation between PayPal Holdings and Targa Resources
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.82 times more return on investment than Targa Resources. However, PayPal Holdings is 1.21 times less risky than Targa Resources. It trades about 0.13 of its potential returns per unit of risk. Targa Resources Corp is currently generating about -0.12 per unit of risk. If you would invest 8,694 in PayPal Holdings on September 12, 2024 and sell it today you would earn a total of 381.00 from holding PayPal Holdings or generate 4.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
PayPal Holdings vs. Targa Resources Corp
Performance |
| Timeline |
| PayPal Holdings |
| Targa Resources Corp |
PayPal Holdings and Targa Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Targa Resources
The main advantage of trading using opposite PayPal Holdings and Targa Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Targa Resources 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 Targa Resources will offset losses from the drop in Targa Resources' long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Targa Resources vs. CNH Industrial NV | Targa Resources vs. METALL ZUG AG | Targa Resources vs. Silvercorp Metals | Targa Resources vs. Innovative Industrial Properties |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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