Correlation Between PayPal Holdings and Sprott Focus
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Sprott Focus 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 Sprott Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Sprott Focus Trust, you can compare the effects of market volatilities on PayPal Holdings and Sprott Focus 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 Sprott Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Sprott Focus.
Diversification Opportunities for PayPal Holdings and Sprott Focus
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between PayPal and Sprott is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Sprott Focus Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Focus Trust 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 Sprott Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Focus Trust has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Sprott Focus go up and down completely randomly.
Pair Corralation between PayPal Holdings and Sprott Focus
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.25 times more return on investment than Sprott Focus. However, PayPal Holdings is 2.25 times more volatile than Sprott Focus Trust. It trades about 0.15 of its potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.16 per unit of risk. If you would invest 8,640 in PayPal Holdings on September 13, 2024 and sell it today you would earn a total of 415.00 from holding PayPal Holdings or generate 4.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
PayPal Holdings vs. Sprott Focus Trust
Performance |
| Timeline |
| PayPal Holdings |
| Sprott Focus Trust |
PayPal Holdings and Sprott Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Sprott Focus
The main advantage of trading using opposite PayPal Holdings and Sprott Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Sprott Focus 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 Sprott Focus will offset losses from the drop in Sprott Focus' long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. American Express |
| Sprott Focus vs. MFS Investment Grade | Sprott Focus vs. Eaton Vance National | Sprott Focus vs. Nuveen California Select | Sprott Focus vs. Federated Premier Municipal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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