Correlation Between PayPal Holdings and NCBA GROUP
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and NCBA GROUP 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 NCBA GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and NCBA GROUP PLC, you can compare the effects of market volatilities on PayPal Holdings and NCBA GROUP 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 NCBA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and NCBA GROUP.
Diversification Opportunities for PayPal Holdings and NCBA GROUP
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between PayPal and NCBA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and NCBA GROUP PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCBA GROUP PLC 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 NCBA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCBA GROUP PLC has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and NCBA GROUP go up and down completely randomly.
Pair Corralation between PayPal Holdings and NCBA GROUP
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.75 times more return on investment than NCBA GROUP. However, PayPal Holdings is 1.33 times less risky than NCBA GROUP. It trades about 0.34 of its potential returns per unit of risk. NCBA GROUP PLC is currently generating about -0.04 per unit of risk. If you would invest 7,813 in PayPal Holdings on September 5, 2024 and sell it today you would earn a total of 1,120 from holding PayPal Holdings or generate 14.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. NCBA GROUP PLC
Performance |
| Timeline |
| PayPal Holdings |
| NCBA GROUP PLC |
PayPal Holdings and NCBA GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and NCBA GROUP
The main advantage of trading using opposite PayPal Holdings and NCBA GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, NCBA GROUP 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 NCBA GROUP will offset losses from the drop in NCBA GROUP's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| NCBA GROUP vs. EQUITY GROUP HOLDINGS | NCBA GROUP vs. BRITISH AMERICAN TOBACCO | NCBA GROUP vs. CO OPERATIVE BANK OF | NCBA GROUP vs. ABSA NEW GOLD |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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