Correlation Between PayPal Holdings and Carbios SAS
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Carbios SAS 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 Carbios SAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Carbios SAS, you can compare the effects of market volatilities on PayPal Holdings and Carbios SAS 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 Carbios SAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Carbios SAS.
Diversification Opportunities for PayPal Holdings and Carbios SAS
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Carbios is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Carbios SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios SAS 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 Carbios SAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios SAS has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Carbios SAS go up and down completely randomly.
Pair Corralation between PayPal Holdings and Carbios SAS
Given the investment horizon of 90 days PayPal Holdings is expected to generate 3.12 times less return on investment than Carbios SAS. But when comparing it to its historical volatility, PayPal Holdings is 4.69 times less risky than Carbios SAS. It trades about 0.19 of its potential returns per unit of risk. Carbios SAS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 835.00 in Carbios SAS on September 16, 2024 and sell it today you would earn a total of 125.00 from holding Carbios SAS or generate 14.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Carbios SAS
Performance |
| Timeline |
| PayPal Holdings |
| Carbios SAS |
PayPal Holdings and Carbios SAS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Carbios SAS
The main advantage of trading using opposite PayPal Holdings and Carbios SAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Carbios SAS 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 Carbios SAS will offset losses from the drop in Carbios SAS's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. American Express |
| Carbios SAS vs. Chemours Co | Carbios SAS vs. International Flavors Fragrances | Carbios SAS vs. Air Products and | Carbios SAS vs. PPG Industries |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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