Correlation Between PayPal Holdings and Growth Portfolio
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Growth Portfolio 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 Growth Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Growth Portfolio Class, you can compare the effects of market volatilities on PayPal Holdings and Growth Portfolio 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 Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Growth Portfolio.
Diversification Opportunities for PayPal Holdings and Growth Portfolio
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Growth is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Growth Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class 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 Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Growth Portfolio go up and down completely randomly.
Pair Corralation between PayPal Holdings and Growth Portfolio
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.78 times less return on investment than Growth Portfolio. In addition to that, PayPal Holdings is 1.18 times more volatile than Growth Portfolio Class. It trades about 0.03 of its total potential returns per unit of risk. Growth Portfolio Class is currently generating about 0.1 per unit of volatility. If you would invest 2,743 in Growth Portfolio Class on September 5, 2024 and sell it today you would earn a total of 3,387 from holding Growth Portfolio Class or generate 123.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Growth Portfolio Class
Performance |
| Timeline |
| PayPal Holdings |
| Growth Portfolio Class |
PayPal Holdings and Growth Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Growth Portfolio
The main advantage of trading using opposite PayPal Holdings and Growth Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Growth Portfolio 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 Growth Portfolio will offset losses from the drop in Growth Portfolio's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Growth Portfolio vs. Mid Cap Growth | Growth Portfolio vs. Small Pany Growth | Growth Portfolio vs. Emerging Markets Portfolio |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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