Correlation Between PayPal Holdings and Amana Participation
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Amana Participation 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 Amana Participation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Amana Participation Fund, you can compare the effects of market volatilities on PayPal Holdings and Amana Participation 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 Amana Participation. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Amana Participation.
Diversification Opportunities for PayPal Holdings and Amana Participation
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Amana is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Amana Participation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Participation 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 Amana Participation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Participation has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Amana Participation go up and down completely randomly.
Pair Corralation between PayPal Holdings and Amana Participation
Given the investment horizon of 90 days PayPal Holdings is expected to generate 22.1 times more return on investment than Amana Participation. However, PayPal Holdings is 22.1 times more volatile than Amana Participation Fund. It trades about 0.34 of its potential returns per unit of risk. Amana Participation Fund is currently generating about 0.06 per unit of risk. If you would invest 7,813 in PayPal Holdings on September 5, 2024 and sell it today you would earn a total of 1,120 from holding PayPal Holdings or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
PayPal Holdings vs. Amana Participation Fund
Performance |
| Timeline |
| PayPal Holdings |
| Amana Participation |
PayPal Holdings and Amana Participation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Amana Participation
The main advantage of trading using opposite PayPal Holdings and Amana Participation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Amana Participation 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 Amana Participation will offset losses from the drop in Amana Participation's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Amana Participation vs. Amana Developing World | Amana Participation vs. Amana Growth Fund | Amana Participation vs. Amana Developing World | Amana Participation vs. Amana Income Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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