Correlation Between PayPal Holdings and Enova International
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Enova International 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 Enova International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Enova International, you can compare the effects of market volatilities on PayPal Holdings and Enova International 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 Enova International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Enova International.
Diversification Opportunities for PayPal Holdings and Enova International
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Enova is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International 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 Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Enova International go up and down completely randomly.
Pair Corralation between PayPal Holdings and Enova International
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.59 times less return on investment than Enova International. In addition to that, PayPal Holdings is 1.04 times more volatile than Enova International. It trades about 0.08 of its total potential returns per unit of risk. Enova International is currently generating about 0.13 per unit of volatility. If you would invest 5,477 in Enova International on September 14, 2024 and sell it today you would earn a total of 4,713 from holding Enova International or generate 86.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Enova International
Performance |
| Timeline |
| PayPal Holdings |
| Enova International |
PayPal Holdings and Enova International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Enova International
The main advantage of trading using opposite PayPal Holdings and Enova International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Enova International 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 Enova International will offset losses from the drop in Enova International's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Enova International vs. Visa Class A | Enova International vs. PayPal Holdings | Enova International vs. Upstart Holdings | Enova International vs. Mastercard |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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