Correlation Between PayPal Holdings and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Airtel Africa Plc, you can compare the effects of market volatilities on PayPal Holdings and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Airtel Africa.
Diversification Opportunities for PayPal Holdings and Airtel Africa
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Airtel is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Airtel Africa go up and down completely randomly.
Pair Corralation between PayPal Holdings and Airtel Africa
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.41 times more return on investment than Airtel Africa. However, PayPal Holdings is 2.44 times less risky than Airtel Africa. It trades about 0.1 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.12 per unit of risk. If you would invest 8,359 in PayPal Holdings on August 29, 2024 and sell it today you would earn a total of 335.00 from holding PayPal Holdings or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Airtel Africa Plc
Performance |
| Timeline |
| PayPal Holdings |
| Airtel Africa Plc |
PayPal Holdings and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Airtel Africa
The main advantage of trading using opposite PayPal Holdings and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
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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