Correlation Between PayPal Holdings and Pfizer
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Pfizer 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 Pfizer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Pfizer Inc, you can compare the effects of market volatilities on PayPal Holdings and Pfizer 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 Pfizer. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Pfizer.
Diversification Opportunities for PayPal Holdings and Pfizer
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PayPal and Pfizer is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Pfizer Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pfizer Inc 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 Pfizer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pfizer Inc has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Pfizer go up and down completely randomly.
Pair Corralation between PayPal Holdings and Pfizer
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.56 times more return on investment than Pfizer. However, PayPal Holdings is 1.56 times more volatile than Pfizer Inc. It trades about 0.01 of its potential returns per unit of risk. Pfizer Inc is currently generating about -0.04 per unit of risk. If you would invest 7,452 in PayPal Holdings on November 27, 2024 and sell it today you would earn a total of 43.00 from holding PayPal Holdings or generate 0.58% 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. Pfizer Inc
Performance |
| Timeline |
| PayPal Holdings |
| Pfizer Inc |
PayPal Holdings and Pfizer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Pfizer
The main advantage of trading using opposite PayPal Holdings and Pfizer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Pfizer 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 Pfizer will offset losses from the drop in Pfizer's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Pfizer vs. Emergent Biosolutions | Pfizer vs. Bausch Health Companies | Pfizer vs. Neurocrine Biosciences | Pfizer vs. Teva Pharma Industries |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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