Correlation Between PayPal Holdings and Franklin California
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Franklin California 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 Franklin California into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Franklin California Intermediate Term, you can compare the effects of market volatilities on PayPal Holdings and Franklin California 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 Franklin California. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Franklin California.
Diversification Opportunities for PayPal Holdings and Franklin California
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Franklin is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Franklin California Intermedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin California 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 Franklin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin California has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Franklin California go up and down completely randomly.
Pair Corralation between PayPal Holdings and Franklin California
Given the investment horizon of 90 days PayPal Holdings is expected to generate 13.31 times more return on investment than Franklin California. However, PayPal Holdings is 13.31 times more volatile than Franklin California Intermediate Term. It trades about 0.08 of its potential returns per unit of risk. Franklin California Intermediate Term is currently generating about 0.1 per unit of risk. If you would invest 5,904 in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of 2,749 from holding PayPal Holdings or generate 46.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
PayPal Holdings vs. Franklin California Intermedia
Performance |
| Timeline |
| PayPal Holdings |
| Franklin California |
PayPal Holdings and Franklin California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Franklin California
The main advantage of trading using opposite PayPal Holdings and Franklin California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Franklin California 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 Franklin California will offset losses from the drop in Franklin California's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Visa Class A |
| Franklin California vs. Franklin Mutual Beacon | Franklin California vs. Templeton Developing Markets | Franklin California vs. Franklin Mutual Global | Franklin California vs. Franklin Mutual Global |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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