Correlation Between PayPal Holdings and Highlands Bankshares
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Highlands Bankshares 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 Highlands Bankshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Highlands Bankshares, you can compare the effects of market volatilities on PayPal Holdings and Highlands Bankshares 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 Highlands Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Highlands Bankshares.
Diversification Opportunities for PayPal Holdings and Highlands Bankshares
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Highlands is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Highlands Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlands Bankshares 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 Highlands Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlands Bankshares has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Highlands Bankshares go up and down completely randomly.
Pair Corralation between PayPal Holdings and Highlands Bankshares
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.01 times more return on investment than Highlands Bankshares. However, PayPal Holdings is 2.01 times more volatile than Highlands Bankshares. It trades about 0.35 of its potential returns per unit of risk. Highlands Bankshares is currently generating about 0.36 per unit of risk. If you would invest 7,813 in PayPal Holdings on September 3, 2024 and sell it today you would earn a total of 864.00 from holding PayPal Holdings or generate 11.06% 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. Highlands Bankshares
Performance |
| Timeline |
| PayPal Holdings |
| Highlands Bankshares |
PayPal Holdings and Highlands Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Highlands Bankshares
The main advantage of trading using opposite PayPal Holdings and Highlands Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Highlands Bankshares 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 Highlands Bankshares will offset losses from the drop in Highlands Bankshares' long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Highlands Bankshares vs. First Bancorp | Highlands Bankshares vs. LINKBANCORP | Highlands Bankshares vs. Bankwell Financial Group | Highlands Bankshares vs. FS Bancorp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance |