Correlation Between PayPal Holdings and Ladenburg Thalmann
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Ladenburg Thalmann 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 Ladenburg Thalmann into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Ladenburg Thalmann Financial, you can compare the effects of market volatilities on PayPal Holdings and Ladenburg Thalmann 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 Ladenburg Thalmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Ladenburg Thalmann.
Diversification Opportunities for PayPal Holdings and Ladenburg Thalmann
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Ladenburg is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Ladenburg Thalmann Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladenburg Thalmann 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 Ladenburg Thalmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladenburg Thalmann has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Ladenburg Thalmann go up and down completely randomly.
Pair Corralation between PayPal Holdings and Ladenburg Thalmann
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.55 times more return on investment than Ladenburg Thalmann. However, PayPal Holdings is 1.83 times less risky than Ladenburg Thalmann. It trades about 0.03 of its potential returns per unit of risk. Ladenburg Thalmann Financial is currently generating about 0.02 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 29.09% |
| Values | Daily Returns |
PayPal Holdings vs. Ladenburg Thalmann Financial
Performance |
| Timeline |
| PayPal Holdings |
| Ladenburg Thalmann |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PayPal Holdings and Ladenburg Thalmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Ladenburg Thalmann
The main advantage of trading using opposite PayPal Holdings and Ladenburg Thalmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Ladenburg Thalmann 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 Ladenburg Thalmann will offset losses from the drop in Ladenburg Thalmann's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |