Correlation Between PayPal Holdings and Massmutual Retiresmart
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Massmutual Retiresmart 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 Massmutual Retiresmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Massmutual Retiresmart 2045, you can compare the effects of market volatilities on PayPal Holdings and Massmutual Retiresmart 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 Massmutual Retiresmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Massmutual Retiresmart.
Diversification Opportunities for PayPal Holdings and Massmutual Retiresmart
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Massmutual is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Massmutual Retiresmart 2045 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Retiresmart 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 Massmutual Retiresmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Retiresmart has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Massmutual Retiresmart go up and down completely randomly.
Pair Corralation between PayPal Holdings and Massmutual Retiresmart
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.49 times more return on investment than Massmutual Retiresmart. However, PayPal Holdings is 2.49 times more volatile than Massmutual Retiresmart 2045. It trades about 0.03 of its potential returns per unit of risk. Massmutual Retiresmart 2045 is currently generating about 0.04 per unit of risk. If you would invest 7,263 in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of 1,390 from holding PayPal Holdings or generate 19.14% 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. Massmutual Retiresmart 2045
Performance |
| Timeline |
| PayPal Holdings |
| Massmutual Retiresmart |
PayPal Holdings and Massmutual Retiresmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Massmutual Retiresmart
The main advantage of trading using opposite PayPal Holdings and Massmutual Retiresmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Massmutual Retiresmart 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 Massmutual Retiresmart will offset losses from the drop in Massmutual Retiresmart's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Visa Class A |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |