Correlation Between PayPal Holdings and Lifex Income
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Lifex Income 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 Lifex Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Lifex Income, you can compare the effects of market volatilities on PayPal Holdings and Lifex Income 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 Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Lifex Income.
Diversification Opportunities for PayPal Holdings and Lifex Income
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Lifex is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income 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 Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Lifex Income go up and down completely randomly.
Pair Corralation between PayPal Holdings and Lifex Income
Given the investment horizon of 90 days PayPal Holdings is expected to generate 3.17 times more return on investment than Lifex Income. However, PayPal Holdings is 3.17 times more volatile than Lifex Income. It trades about 0.03 of its potential returns per unit of risk. Lifex Income is currently generating about 0.01 per unit of risk. If you would invest 7,263 in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of 1,390 from holding PayPal Holdings or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 46.06% |
| Values | Daily Returns |
PayPal Holdings vs. Lifex Income
Performance |
| Timeline |
| PayPal Holdings |
| Lifex Income |
PayPal Holdings and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Lifex Income
The main advantage of trading using opposite PayPal Holdings and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Lifex Income 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 Lifex Income will offset losses from the drop in Lifex Income'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 |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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