Correlation Between PayPal Holdings and Halma Plc
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Halma Plc 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 Halma Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Halma plc, you can compare the effects of market volatilities on PayPal Holdings and Halma Plc 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 Halma Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Halma Plc.
Diversification Opportunities for PayPal Holdings and Halma Plc
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Halma is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Halma plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halma plc 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 Halma Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halma plc has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Halma Plc go up and down completely randomly.
Pair Corralation between PayPal Holdings and Halma Plc
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.14 times more return on investment than Halma Plc. However, PayPal Holdings is 1.14 times more volatile than Halma plc. It trades about 0.08 of its potential returns per unit of risk. Halma plc is currently generating about 0.06 per unit of risk. If you would invest 5,985 in PayPal Holdings on August 29, 2024 and sell it today you would earn a total of 2,709 from holding PayPal Holdings or generate 45.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
PayPal Holdings vs. Halma plc
Performance |
| Timeline |
| PayPal Holdings |
| Halma plc |
PayPal Holdings and Halma Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Halma Plc
The main advantage of trading using opposite PayPal Holdings and Halma Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Halma Plc 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 Halma Plc will offset losses from the drop in Halma Plc's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Halma Plc vs. Honeywell International | Halma Plc vs. 3M Company | Halma Plc vs. Mitsubishi Corp | Halma Plc vs. Hitachi |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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