Correlation Between PayPal Holdings and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Atlas Copco AB, you can compare the effects of market volatilities on PayPal Holdings and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Atlas Copco.
Diversification Opportunities for PayPal Holdings and Atlas Copco
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Atlas is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Atlas Copco go up and down completely randomly.
Pair Corralation between PayPal Holdings and Atlas Copco
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.12 times more return on investment than Atlas Copco. However, PayPal Holdings is 1.12 times more volatile than Atlas Copco AB. It trades about 0.12 of its potential returns per unit of risk. Atlas Copco AB is currently generating about -0.01 per unit of risk. If you would invest 5,827 in PayPal Holdings on September 1, 2024 and sell it today you would earn a total of 2,850 from holding PayPal Holdings or generate 48.91% 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. Atlas Copco AB
Performance |
| Timeline |
| PayPal Holdings |
| Atlas Copco AB |
PayPal Holdings and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Atlas Copco
The main advantage of trading using opposite PayPal Holdings and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Atlas Copco vs. GE Aerospace | Atlas Copco vs. Eaton PLC | Atlas Copco vs. Siemens AG Class | Atlas Copco vs. Parker Hannifin |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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