Correlation Between PayPal Holdings and Inderes Oyj

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Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Inderes Oyj 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 Inderes Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Inderes Oyj, you can compare the effects of market volatilities on PayPal Holdings and Inderes Oyj 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 Inderes Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Inderes Oyj.

Diversification Opportunities for PayPal Holdings and Inderes Oyj

0.78
  Correlation Coefficient

Poor diversification

The 3 months correlation between PayPal and Inderes is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Inderes Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inderes Oyj 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 Inderes Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inderes Oyj has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Inderes Oyj go up and down completely randomly.

Pair Corralation between PayPal Holdings and Inderes Oyj

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.11 times more return on investment than Inderes Oyj. However, PayPal Holdings is 1.11 times more volatile than Inderes Oyj. It trades about 0.03 of its potential returns per unit of risk. Inderes Oyj is currently generating about 0.0 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 Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.6%
ValuesDaily Returns

PayPal Holdings  vs.  Inderes Oyj

 Performance 
       Timeline  
PayPal Holdings 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.
Inderes Oyj 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Inderes Oyj are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Inderes Oyj unveiled solid returns over the last few months and may actually be approaching a breakup point.

PayPal Holdings and Inderes Oyj Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PayPal Holdings and Inderes Oyj

The main advantage of trading using opposite PayPal Holdings and Inderes Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Inderes Oyj 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 Inderes Oyj will offset losses from the drop in Inderes Oyj's long position.
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The idea behind PayPal Holdings and Inderes Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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