Correlation Between PayPal Holdings and Hanover House
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Hanover House 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 Hanover House into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Hanover House, you can compare the effects of market volatilities on PayPal Holdings and Hanover House 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 Hanover House. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Hanover House.
Diversification Opportunities for PayPal Holdings and Hanover House
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Hanover is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Hanover House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover House 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 Hanover House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover House has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Hanover House go up and down completely randomly.
Pair Corralation between PayPal Holdings and Hanover House
Given the investment horizon of 90 days PayPal Holdings is expected to generate 4.56 times less return on investment than Hanover House. But when comparing it to its historical volatility, PayPal Holdings is 5.23 times less risky than Hanover House. It trades about 0.09 of its potential returns per unit of risk. Hanover House is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.65 in Hanover House on August 29, 2024 and sell it today you would earn a total of 0.04 from holding Hanover House or generate 6.15% 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. Hanover House
Performance |
| Timeline |
| PayPal Holdings |
| Hanover House |
PayPal Holdings and Hanover House Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Hanover House
The main advantage of trading using opposite PayPal Holdings and Hanover House positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Hanover House 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 Hanover House will offset losses from the drop in Hanover House's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Hanover House vs. Warner Music Group | Hanover House vs. Live Nation Entertainment | Hanover House vs. Atlanta Braves Holdings, | Hanover House vs. Warner Bros Discovery |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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