Correlation Between PayPal Holdings and Melexis NV
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Melexis NV 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 Melexis NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Melexis NV, you can compare the effects of market volatilities on PayPal Holdings and Melexis NV 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 Melexis NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Melexis NV.
Diversification Opportunities for PayPal Holdings and Melexis NV
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and Melexis is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Melexis NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melexis NV 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 Melexis NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melexis NV has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Melexis NV go up and down completely randomly.
Pair Corralation between PayPal Holdings and Melexis NV
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.81 times more return on investment than Melexis NV. However, PayPal Holdings is 1.23 times less risky than Melexis NV. It trades about 0.03 of its potential returns per unit of risk. Melexis NV is currently generating about 0.02 per unit of risk. If you would invest 7,357 in PayPal Holdings on August 30, 2024 and sell it today you would earn a total of 1,300 from holding PayPal Holdings or generate 17.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
PayPal Holdings vs. Melexis NV
Performance |
| Timeline |
| PayPal Holdings |
| Melexis NV |
PayPal Holdings and Melexis NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Melexis NV
The main advantage of trading using opposite PayPal Holdings and Melexis NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Melexis NV 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 Melexis NV will offset losses from the drop in Melexis NV's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Melexis NV vs. NVIDIA | Melexis NV vs. Intel | Melexis NV vs. Taiwan Semiconductor Manufacturing | Melexis NV vs. Marvell Technology Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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