Correlation Between PayPal Holdings and American Funds
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and American Funds 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 American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and American Funds Global, you can compare the effects of market volatilities on PayPal Holdings and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and American Funds.
Diversification Opportunities for PayPal Holdings and American Funds
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PayPal and American is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and American Funds go up and down completely randomly.
Pair Corralation between PayPal Holdings and American Funds
Given the investment horizon of 90 days PayPal Holdings is expected to generate 3.41 times more return on investment than American Funds. However, PayPal Holdings is 3.41 times more volatile than American Funds Global. It trades about 0.34 of its potential returns per unit of risk. American Funds Global is currently generating about 0.22 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 Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PayPal Holdings vs. American Funds Global
Performance |
| Timeline |
| PayPal Holdings |
| American Funds Global |
PayPal Holdings and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and American Funds
The main advantage of trading using opposite PayPal Holdings and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| American Funds vs. Rationalpier 88 Convertible | American Funds vs. Virtus Convertible | American Funds vs. Allianzgi Convertible Income | American Funds vs. Absolute Convertible Arbitrage |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |