Correlation Between PayPal Holdings and LG Clean
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and LG Clean 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 LG Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and LG Clean Water, you can compare the effects of market volatilities on PayPal Holdings and LG Clean 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 LG Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and LG Clean.
Diversification Opportunities for PayPal Holdings and LG Clean
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and GLUG is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and LG Clean Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Clean Water 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 LG Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Clean Water has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and LG Clean go up and down completely randomly.
Pair Corralation between PayPal Holdings and LG Clean
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.23 times more return on investment than LG Clean. However, PayPal Holdings is 2.23 times more volatile than LG Clean Water. It trades about 0.03 of its potential returns per unit of risk. LG Clean Water is currently generating about 0.05 per unit of risk. If you would invest 7,263 in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of 1,390 from holding PayPal Holdings or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
PayPal Holdings vs. LG Clean Water
Performance |
| Timeline |
| PayPal Holdings |
| LG Clean Water |
PayPal Holdings and LG Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and LG Clean
The main advantage of trading using opposite PayPal Holdings and LG Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, LG Clean 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 LG Clean will offset losses from the drop in LG Clean'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 |
| LG Clean vs. Vanguard FTSE Emerging | LG Clean vs. UBS ETF MSCI | LG Clean vs. VanEck Solana ETN | LG Clean vs. iShares Corp Bond |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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