Correlation Between PayPal Holdings and Red Moon
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Red Moon 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 Red Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Red Moon Resources, you can compare the effects of market volatilities on PayPal Holdings and Red Moon 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 Red Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Red Moon.
Diversification Opportunities for PayPal Holdings and Red Moon
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Red is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Red Moon Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Moon Resources 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 Red Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Moon Resources has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Red Moon go up and down completely randomly.
Pair Corralation between PayPal Holdings and Red Moon
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.9 times more return on investment than Red Moon. However, PayPal Holdings is 1.11 times less risky than Red Moon. It trades about 0.27 of its potential returns per unit of risk. Red Moon Resources is currently generating about -0.16 per unit of risk. If you would invest 7,930 in PayPal Holdings on September 1, 2024 and sell it today you would earn a total of 747.00 from holding PayPal Holdings or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Red Moon Resources
Performance |
| Timeline |
| PayPal Holdings |
| Red Moon Resources |
PayPal Holdings and Red Moon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Red Moon
The main advantage of trading using opposite PayPal Holdings and Red Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Red Moon 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 Red Moon will offset losses from the drop in Red Moon's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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