Correlation Between PayPal Holdings and Ferronordic
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Ferronordic 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 Ferronordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Ferronordic AB, you can compare the effects of market volatilities on PayPal Holdings and Ferronordic 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 Ferronordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Ferronordic.
Diversification Opportunities for PayPal Holdings and Ferronordic
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Ferronordic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Ferronordic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ferronordic AB 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 Ferronordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ferronordic AB has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Ferronordic go up and down completely randomly.
Pair Corralation between PayPal Holdings and Ferronordic
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.38 times less return on investment than Ferronordic. But when comparing it to its historical volatility, PayPal Holdings is 1.53 times less risky than Ferronordic. It trades about 0.03 of its potential returns per unit of risk. Ferronordic AB is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,914 in Ferronordic AB on September 4, 2024 and sell it today you would earn a total of 906.00 from holding Ferronordic AB or generate 18.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
PayPal Holdings vs. Ferronordic AB
Performance |
| Timeline |
| PayPal Holdings |
| Ferronordic AB |
PayPal Holdings and Ferronordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Ferronordic
The main advantage of trading using opposite PayPal Holdings and Ferronordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Ferronordic 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 Ferronordic will offset losses from the drop in Ferronordic'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 |
| Ferronordic vs. JLT Mobile Computers | Ferronordic vs. White Pearl Technology | Ferronordic vs. Upsales Technology AB | Ferronordic vs. Beowulf Mining PLC |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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