Correlation Between PayPal Holdings and FinVolution
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and FinVolution 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 FinVolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and FinVolution Group, you can compare the effects of market volatilities on PayPal Holdings and FinVolution 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 FinVolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and FinVolution.
Diversification Opportunities for PayPal Holdings and FinVolution
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and FinVolution is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and FinVolution Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinVolution Group 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 FinVolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinVolution Group has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and FinVolution go up and down completely randomly.
Pair Corralation between PayPal Holdings and FinVolution
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.1 times less return on investment than FinVolution. In addition to that, PayPal Holdings is 1.06 times more volatile than FinVolution Group. It trades about 0.08 of its total potential returns per unit of risk. FinVolution Group is currently generating about 0.09 per unit of volatility. If you would invest 452.00 in FinVolution Group on September 14, 2024 and sell it today you would earn a total of 232.50 from holding FinVolution Group or generate 51.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. FinVolution Group
Performance |
| Timeline |
| PayPal Holdings |
| FinVolution Group |
PayPal Holdings and FinVolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and FinVolution
The main advantage of trading using opposite PayPal Holdings and FinVolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, FinVolution 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 FinVolution will offset losses from the drop in FinVolution's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| FinVolution vs. Visa Class A | FinVolution vs. PayPal Holdings | FinVolution vs. Upstart Holdings | FinVolution 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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