Correlation Between PayPal Holdings and SPO Global
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and SPO Global 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 SPO Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and SPO Global, you can compare the effects of market volatilities on PayPal Holdings and SPO Global 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 SPO Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and SPO Global.
Diversification Opportunities for PayPal Holdings and SPO Global
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and SPO is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and SPO Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPO Global 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 SPO Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPO Global has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and SPO Global go up and down completely randomly.
Pair Corralation between PayPal Holdings and SPO Global
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.41 times more return on investment than SPO Global. However, PayPal Holdings is 2.42 times less risky than SPO Global. It trades about -0.29 of its potential returns per unit of risk. SPO Global is currently generating about -0.18 per unit of risk. If you would invest 9,024 in PayPal Holdings on November 28, 2024 and sell it today you would lose (1,724) from holding PayPal Holdings or give up 19.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
PayPal Holdings vs. SPO Global
Performance |
| Timeline |
| PayPal Holdings |
| SPO Global |
PayPal Holdings and SPO Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and SPO Global
The main advantage of trading using opposite PayPal Holdings and SPO Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, SPO Global 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 SPO Global will offset losses from the drop in SPO Global's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| SPO Global vs. Image Protect | SPO Global vs. Wanderport Corp | SPO Global vs. Imd Companies | SPO Global vs. MDM Permian |
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 Stocks Directory module to find actively traded stocks across global markets.
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