Correlation Between PayPal Holdings and Carbios
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Carbios 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 Carbios into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Carbios, you can compare the effects of market volatilities on PayPal Holdings and Carbios 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 Carbios. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Carbios.
Diversification Opportunities for PayPal Holdings and Carbios
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Carbios is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios 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 Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Carbios go up and down completely randomly.
Pair Corralation between PayPal Holdings and Carbios
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.63 times more return on investment than Carbios. However, PayPal Holdings is 1.59 times less risky than Carbios. It trades about 0.03 of its potential returns per unit of risk. Carbios is currently generating about -0.09 per unit of risk. If you would invest 6,977 in PayPal Holdings on September 5, 2024 and sell it today you would earn a total of 1,537 from holding PayPal Holdings or generate 22.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.02% |
| Values | Daily Returns |
PayPal Holdings vs. Carbios
Performance |
| Timeline |
| PayPal Holdings |
| Carbios |
PayPal Holdings and Carbios Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Carbios
The main advantage of trading using opposite PayPal Holdings and Carbios positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Carbios 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 Carbios will offset losses from the drop in Carbios' long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Carbios vs. Spirent Communications plc | Carbios vs. INTERSHOP Communications Aktiengesellschaft | Carbios vs. Chunghwa Telecom Co | Carbios vs. Harmony Gold Mining |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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