Correlation Between PayPal Holdings and Heineken Holding
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Heineken Holding 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 Heineken Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Heineken Holding NV, you can compare the effects of market volatilities on PayPal Holdings and Heineken Holding 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 Heineken Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Heineken Holding.
Diversification Opportunities for PayPal Holdings and Heineken Holding
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Heineken is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Heineken Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heineken Holding 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 Heineken Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heineken Holding has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Heineken Holding go up and down completely randomly.
Pair Corralation between PayPal Holdings and Heineken Holding
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.45 times more return on investment than Heineken Holding. However, PayPal Holdings is 1.45 times more volatile than Heineken Holding NV. It trades about 0.09 of its potential returns per unit of risk. Heineken Holding NV is currently generating about -0.08 per unit of risk. If you would invest 6,135 in PayPal Holdings on August 28, 2024 and sell it today you would earn a total of 2,642 from holding PayPal Holdings or generate 43.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
PayPal Holdings vs. Heineken Holding NV
Performance |
| Timeline |
| PayPal Holdings |
| Heineken Holding |
PayPal Holdings and Heineken Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Heineken Holding
The main advantage of trading using opposite PayPal Holdings and Heineken Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Heineken Holding 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 Heineken Holding will offset losses from the drop in Heineken Holding's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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