Correlation Between PayPal Holdings and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Mfs Lifetime 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 Mfs Lifetime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Mfs Lifetime 2040, you can compare the effects of market volatilities on PayPal Holdings and Mfs Lifetime 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 Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Mfs Lifetime.
Diversification Opportunities for PayPal Holdings and Mfs Lifetime
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Mfs is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Mfs Lifetime 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2040 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 Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2040 has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Mfs Lifetime go up and down completely randomly.
Pair Corralation between PayPal Holdings and Mfs Lifetime
Given the investment horizon of 90 days PayPal Holdings is expected to generate 3.98 times more return on investment than Mfs Lifetime. However, PayPal Holdings is 3.98 times more volatile than Mfs Lifetime 2040. It trades about 0.21 of its potential returns per unit of risk. Mfs Lifetime 2040 is currently generating about 0.14 per unit of risk. If you would invest 7,036 in PayPal Holdings on September 12, 2024 and sell it today you would earn a total of 1,840 from holding PayPal Holdings or generate 26.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
PayPal Holdings vs. Mfs Lifetime 2040
Performance |
| Timeline |
| PayPal Holdings |
| Mfs Lifetime 2040 |
PayPal Holdings and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Mfs Lifetime
The main advantage of trading using opposite PayPal Holdings and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Mfs Lifetime 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 Mfs Lifetime will offset losses from the drop in Mfs Lifetime's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Mastercard |
| Mfs Lifetime vs. Allianzgi Health Sciences | Mfs Lifetime vs. Deutsche Health And | Mfs Lifetime vs. Alger Health Sciences | Mfs Lifetime vs. Delaware Healthcare Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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