Correlation Between PayPal Holdings and Appen
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Appen 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 Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Appen, you can compare the effects of market volatilities on PayPal Holdings and Appen 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 Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Appen.
Diversification Opportunities for PayPal Holdings and Appen
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Appen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Appen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen 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 Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Appen go up and down completely randomly.
Pair Corralation between PayPal Holdings and Appen
Given the investment horizon of 90 days PayPal Holdings is expected to generate 4.28 times less return on investment than Appen. But when comparing it to its historical volatility, PayPal Holdings is 3.21 times less risky than Appen. It trades about 0.03 of its potential returns per unit of risk. Appen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 229.00 in Appen on September 4, 2024 and sell it today you would earn a total of 7.00 from holding Appen or generate 3.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.2% |
| Values | Daily Returns |
PayPal Holdings vs. Appen
Performance |
| Timeline |
| PayPal Holdings |
| Appen |
PayPal Holdings and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Appen
The main advantage of trading using opposite PayPal Holdings and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Appen 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 Appen will offset losses from the drop in Appen's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Visa Class A |
| Appen vs. Tombador Iron | Appen vs. Bisalloy Steel Group | Appen vs. Cleanaway Waste Management | Appen vs. Clime Investment Management |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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