Correlation Between PayPal Holdings and CIMB SP
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and CIMB SP 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 CIMB SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and CIMB SP Ethical, you can compare the effects of market volatilities on PayPal Holdings and CIMB SP 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 CIMB SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and CIMB SP.
Diversification Opportunities for PayPal Holdings and CIMB SP
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and CIMB is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and CIMB SP Ethical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB SP Ethical 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 CIMB SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB SP Ethical has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and CIMB SP go up and down completely randomly.
Pair Corralation between PayPal Holdings and CIMB SP
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.22 times more return on investment than CIMB SP. However, PayPal Holdings is 2.22 times more volatile than CIMB SP Ethical. It trades about 0.08 of its potential returns per unit of risk. CIMB SP Ethical is currently generating about 0.13 per unit of risk. If you would invest 5,904 in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of 2,610 from holding PayPal Holdings or generate 44.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
PayPal Holdings vs. CIMB SP Ethical
Performance |
| Timeline |
| PayPal Holdings |
| CIMB SP Ethical |
PayPal Holdings and CIMB SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and CIMB SP
The main advantage of trading using opposite PayPal Holdings and CIMB SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, CIMB SP 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 CIMB SP will offset losses from the drop in CIMB SP'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 |
| CIMB SP vs. iShares Govt Bond | CIMB SP vs. Amundi MSCI Europe | CIMB SP vs. iShares Global AAA AA | CIMB SP vs. iShares Smart City |
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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