Correlation Between PayPal Holdings and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Mainstay Moderate 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 Mainstay Moderate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Mainstay Moderate Allocation, you can compare the effects of market volatilities on PayPal Holdings and Mainstay Moderate 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 Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Mainstay Moderate.
Diversification Opportunities for PayPal Holdings and Mainstay Moderate
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Mainstay is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate 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 Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Mainstay Moderate go up and down completely randomly.
Pair Corralation between PayPal Holdings and Mainstay Moderate
Given the investment horizon of 90 days PayPal Holdings is expected to generate 4.4 times more return on investment than Mainstay Moderate. However, PayPal Holdings is 4.4 times more volatile than Mainstay Moderate Allocation. It trades about 0.03 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.09 per unit of risk. If you would invest 7,370 in PayPal Holdings on September 3, 2024 and sell it today you would earn a total of 1,307 from holding PayPal Holdings or generate 17.73% 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. Mainstay Moderate Allocation
Performance |
| Timeline |
| PayPal Holdings |
| Mainstay Moderate |
PayPal Holdings and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Mainstay Moderate
The main advantage of trading using opposite PayPal Holdings and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Mainstay Moderate vs. Calamos Dynamic Convertible | Mainstay Moderate vs. Absolute Convertible Arbitrage | Mainstay Moderate vs. Gabelli Convertible And | Mainstay Moderate vs. Lord Abbett Convertible |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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