Correlation Between PayPal Holdings and Cowen
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Cowen 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 Cowen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Cowen Group, you can compare the effects of market volatilities on PayPal Holdings and Cowen 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 Cowen. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Cowen.
Diversification Opportunities for PayPal Holdings and Cowen
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Cowen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Cowen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowen Group 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 Cowen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowen Group has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Cowen go up and down completely randomly.
Pair Corralation between PayPal Holdings and Cowen
If you would invest 7,731 in PayPal Holdings on September 3, 2024 and sell it today you would earn a total of 946.00 from holding PayPal Holdings or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 2.38% |
| Values | Daily Returns |
PayPal Holdings vs. Cowen Group
Performance |
| Timeline |
| PayPal Holdings |
| Cowen Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PayPal Holdings and Cowen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Cowen
The main advantage of trading using opposite PayPal Holdings and Cowen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Cowen 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 Cowen will offset losses from the drop in Cowen's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Cowen vs. Ihuman Inc | Cowen vs. Where Food Comes | Cowen vs. Cadence Design Systems | Cowen vs. Zane Interactive Publishing |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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