Correlation Between PayPal Holdings and MultiChoice
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and MultiChoice 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 MultiChoice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and MultiChoice Group, you can compare the effects of market volatilities on PayPal Holdings and MultiChoice 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 MultiChoice. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and MultiChoice.
Diversification Opportunities for PayPal Holdings and MultiChoice
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PayPal and MultiChoice is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and MultiChoice Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiChoice Group 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 MultiChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiChoice Group has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and MultiChoice go up and down completely randomly.
Pair Corralation between PayPal Holdings and MultiChoice
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.12 times less return on investment than MultiChoice. But when comparing it to its historical volatility, PayPal Holdings is 1.07 times less risky than MultiChoice. It trades about 0.08 of its potential returns per unit of risk. MultiChoice Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 693,700 in MultiChoice Group on September 3, 2024 and sell it today you would earn a total of 379,300 from holding MultiChoice Group or generate 54.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.19% |
| Values | Daily Returns |
PayPal Holdings vs. MultiChoice Group
Performance |
| Timeline |
| PayPal Holdings |
| MultiChoice Group |
PayPal Holdings and MultiChoice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and MultiChoice
The main advantage of trading using opposite PayPal Holdings and MultiChoice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, MultiChoice 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 MultiChoice will offset losses from the drop in MultiChoice's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| MultiChoice vs. eMedia Holdings Limited | MultiChoice vs. Sasol Ltd Bee | MultiChoice vs. Centaur Bci Balanced | MultiChoice vs. Sabvest Capital |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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