Correlation Between PayPal Holdings and AdvisorShares Restaurant
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and AdvisorShares Restaurant 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 AdvisorShares Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and AdvisorShares Restaurant ETF, you can compare the effects of market volatilities on PayPal Holdings and AdvisorShares Restaurant 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 AdvisorShares Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and AdvisorShares Restaurant.
Diversification Opportunities for PayPal Holdings and AdvisorShares Restaurant
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PayPal and AdvisorShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and AdvisorShares Restaurant ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Restaurant 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 AdvisorShares Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Restaurant has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and AdvisorShares Restaurant go up and down completely randomly.
Pair Corralation between PayPal Holdings and AdvisorShares Restaurant
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.39 times more return on investment than AdvisorShares Restaurant. However, PayPal Holdings is 1.39 times more volatile than AdvisorShares Restaurant ETF. It trades about 0.34 of its potential returns per unit of risk. AdvisorShares Restaurant ETF is currently generating about 0.33 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. AdvisorShares Restaurant ETF
Performance |
| Timeline |
| PayPal Holdings |
| AdvisorShares Restaurant |
PayPal Holdings and AdvisorShares Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and AdvisorShares Restaurant
The main advantage of trading using opposite PayPal Holdings and AdvisorShares Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, AdvisorShares Restaurant 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 AdvisorShares Restaurant will offset losses from the drop in AdvisorShares Restaurant's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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