Correlation Between PayPal Holdings and Disney
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Disney 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 Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Walt Disney, you can compare the effects of market volatilities on PayPal Holdings and Disney 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 Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Disney.
Diversification Opportunities for PayPal Holdings and Disney
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PayPal and Disney is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Disney go up and down completely randomly.
Pair Corralation between PayPal Holdings and Disney
Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Disney. In addition to that, PayPal Holdings is 2.71 times more volatile than Walt Disney. It trades about -0.27 of its total potential returns per unit of risk. Walt Disney is currently generating about -0.07 per unit of volatility. If you would invest 11,334 in Walt Disney on November 27, 2024 and sell it today you would lose (214.00) from holding Walt Disney or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Walt Disney
Performance |
| Timeline |
| PayPal Holdings |
| Walt Disney |
PayPal Holdings and Disney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Disney
The main advantage of trading using opposite PayPal Holdings and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Disney vs. Roku Inc | Disney vs. AMC Entertainment Holdings | Disney vs. Paramount Global Class | Disney vs. Warner Bros Discovery |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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