Correlation Between PayPal Holdings and Western Asset
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Western Asset California, you can compare the effects of market volatilities on PayPal Holdings and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Western Asset.
Diversification Opportunities for PayPal Holdings and Western Asset
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Western is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Western Asset California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset California 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset California has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Western Asset go up and down completely randomly.
Pair Corralation between PayPal Holdings and Western Asset
Given the investment horizon of 90 days PayPal Holdings is expected to generate 10.13 times more return on investment than Western Asset. However, PayPal Holdings is 10.13 times more volatile than Western Asset California. It trades about 0.03 of its potential returns per unit of risk. Western Asset California is currently generating about 0.06 per unit of risk. If you would invest 7,263 in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of 1,390 from holding PayPal Holdings or generate 19.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Western Asset California
Performance |
| Timeline |
| PayPal Holdings |
| Western Asset California |
PayPal Holdings and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Western Asset
The main advantage of trading using opposite PayPal Holdings and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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