Correlation Between PayPal Holdings and Fixed Income
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Fixed Income 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 Fixed Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and The Fixed Income, you can compare the effects of market volatilities on PayPal Holdings and Fixed Income 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 Fixed Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Fixed Income.
Diversification Opportunities for PayPal Holdings and Fixed Income
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between PayPal and Fixed is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and The Fixed Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fixed Income 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 Fixed Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fixed Income has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Fixed Income go up and down completely randomly.
Pair Corralation between PayPal Holdings and Fixed Income
Given the investment horizon of 90 days PayPal Holdings is expected to generate 5.99 times more return on investment than Fixed Income. However, PayPal Holdings is 5.99 times more volatile than The Fixed Income. It trades about 0.03 of its potential returns per unit of risk. The Fixed Income is currently generating about 0.12 per unit of risk. If you would invest 6,857 in PayPal Holdings on September 12, 2024 and sell it today you would earn a total of 2,019 from holding PayPal Holdings or generate 29.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
PayPal Holdings vs. The Fixed Income
Performance |
| Timeline |
| PayPal Holdings |
| Fixed Income |
PayPal Holdings and Fixed Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Fixed Income
The main advantage of trading using opposite PayPal Holdings and Fixed Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Fixed Income 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 Fixed Income will offset losses from the drop in Fixed Income's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Fixed Income vs. Goldman Sachs Government | Fixed Income vs. Davis Government Bond | Fixed Income vs. Inverse Government Long | Fixed Income vs. Schwab Government Money |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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