Correlation Between PayPal Holdings and Wahed FTSE
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Wahed FTSE 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 Wahed FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Wahed FTSE USA, you can compare the effects of market volatilities on PayPal Holdings and Wahed FTSE 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 Wahed FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Wahed FTSE.
Diversification Opportunities for PayPal Holdings and Wahed FTSE
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Wahed is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Wahed FTSE USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wahed FTSE USA 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 Wahed FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wahed FTSE USA has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Wahed FTSE go up and down completely randomly.
Pair Corralation between PayPal Holdings and Wahed FTSE
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.37 times less return on investment than Wahed FTSE. In addition to that, PayPal Holdings is 2.58 times more volatile than Wahed FTSE USA. It trades about 0.03 of its total potential returns per unit of risk. Wahed FTSE USA is currently generating about 0.1 per unit of volatility. If you would invest 3,637 in Wahed FTSE USA on September 4, 2024 and sell it today you would earn a total of 1,735 from holding Wahed FTSE USA or generate 47.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Wahed FTSE USA
Performance |
| Timeline |
| PayPal Holdings |
| Wahed FTSE USA |
PayPal Holdings and Wahed FTSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Wahed FTSE
The main advantage of trading using opposite PayPal Holdings and Wahed FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Wahed FTSE 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 Wahed FTSE will offset losses from the drop in Wahed FTSE'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 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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