Correlation Between PayPal Holdings and Emperador
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Emperador 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 Emperador into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Emperador, you can compare the effects of market volatilities on PayPal Holdings and Emperador 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 Emperador. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Emperador.
Diversification Opportunities for PayPal Holdings and Emperador
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Emperador is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Emperador in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emperador 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 Emperador. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emperador has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Emperador go up and down completely randomly.
Pair Corralation between PayPal Holdings and Emperador
Given the investment horizon of 90 days PayPal Holdings is expected to generate 5.13 times more return on investment than Emperador. However, PayPal Holdings is 5.13 times more volatile than Emperador. It trades about 0.16 of its potential returns per unit of risk. Emperador is currently generating about -0.15 per unit of risk. If you would invest 8,640 in PayPal Holdings on September 13, 2024 and sell it today you would earn a total of 435.00 from holding PayPal Holdings or generate 5.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
PayPal Holdings vs. Emperador
Performance |
| Timeline |
| PayPal Holdings |
| Emperador |
PayPal Holdings and Emperador Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Emperador
The main advantage of trading using opposite PayPal Holdings and Emperador positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Emperador 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 Emperador will offset losses from the drop in Emperador's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Emperador vs. SM Investments Corp | Emperador vs. San Miguel Pure | Emperador vs. Ayala Corp | Emperador vs. Ayala Land |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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