Correlation Between PayPal Holdings and Sanofi
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Sanofi 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 Sanofi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Sanofi, you can compare the effects of market volatilities on PayPal Holdings and Sanofi 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 Sanofi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Sanofi.
Diversification Opportunities for PayPal Holdings and Sanofi
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and Sanofi is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Sanofi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi 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 Sanofi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Sanofi go up and down completely randomly.
Pair Corralation between PayPal Holdings and Sanofi
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.4 times more return on investment than Sanofi. However, PayPal Holdings is 1.4 times more volatile than Sanofi. It trades about 0.17 of its potential returns per unit of risk. Sanofi is currently generating about -0.22 per unit of risk. If you would invest 7,731 in PayPal Holdings on September 3, 2024 and sell it today you would earn a total of 946.00 from holding PayPal Holdings or generate 12.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
PayPal Holdings vs. Sanofi
Performance |
| Timeline |
| PayPal Holdings |
| Sanofi |
PayPal Holdings and Sanofi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Sanofi
The main advantage of trading using opposite PayPal Holdings and Sanofi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Sanofi 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 Sanofi will offset losses from the drop in Sanofi's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| Sanofi vs. Genworth Financial | Sanofi vs. Grupo Carso SAB | Sanofi vs. McEwen Mining | Sanofi vs. Cognizant Technology Solutions |
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 Directory module to find actively traded commodities issued by global exchanges.
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