Correlation Between PayPal Holdings and Direxion Shares
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Direxion Shares 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 Direxion Shares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Direxion Shares ETF, you can compare the effects of market volatilities on PayPal Holdings and Direxion Shares 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 Direxion Shares. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Direxion Shares.
Diversification Opportunities for PayPal Holdings and Direxion Shares
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Direxion is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Direxion Shares ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direxion Shares ETF 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 Direxion Shares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direxion Shares ETF has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Direxion Shares go up and down completely randomly.
Pair Corralation between PayPal Holdings and Direxion Shares
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.63 times more return on investment than Direxion Shares. However, PayPal Holdings is 1.6 times less risky than Direxion Shares. It trades about 0.03 of its potential returns per unit of risk. Direxion Shares ETF is currently generating about -0.05 per unit of risk. If you would invest 7,370 in PayPal Holdings on September 3, 2024 and sell it today you would earn a total of 1,307 from holding PayPal Holdings or generate 17.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.38% |
| Values | Daily Returns |
PayPal Holdings vs. Direxion Shares ETF
Performance |
| Timeline |
| PayPal Holdings |
| Direxion Shares ETF |
PayPal Holdings and Direxion Shares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Direxion Shares
The main advantage of trading using opposite PayPal Holdings and Direxion Shares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Direxion Shares 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 Direxion Shares will offset losses from the drop in Direxion Shares' long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Direxion Shares vs. Vanguard Index Funds | Direxion Shares vs. Vanguard Index Funds | Direxion Shares vs. Vanguard STAR Funds | Direxion Shares vs. SPDR SP 500 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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