Correlation Between PayPal Holdings and Sumo Logic
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Sumo Logic 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 Sumo Logic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Sumo Logic, you can compare the effects of market volatilities on PayPal Holdings and Sumo Logic 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 Sumo Logic. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Sumo Logic.
Diversification Opportunities for PayPal Holdings and Sumo Logic
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Sumo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Sumo Logic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumo Logic 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 Sumo Logic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumo Logic has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Sumo Logic go up and down completely randomly.
Pair Corralation between PayPal Holdings and Sumo Logic
Given the investment horizon of 90 days PayPal Holdings is expected to generate 5.66 times less return on investment than Sumo Logic. But when comparing it to its historical volatility, PayPal Holdings is 1.57 times less risky than Sumo Logic. It trades about 0.03 of its potential returns per unit of risk. Sumo Logic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 891.00 in Sumo Logic on September 4, 2024 and sell it today you would earn a total of 313.00 from holding Sumo Logic or generate 35.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 21.21% |
| Values | Daily Returns |
PayPal Holdings vs. Sumo Logic
Performance |
| Timeline |
| PayPal Holdings |
| Sumo Logic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PayPal Holdings and Sumo Logic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Sumo Logic
The main advantage of trading using opposite PayPal Holdings and Sumo Logic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Sumo Logic 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 Sumo Logic will offset losses from the drop in Sumo Logic'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 |
| Sumo Logic vs. PagSeguro Digital | Sumo Logic vs. Endava | Sumo Logic vs. Nutanix | Sumo Logic vs. Palo Alto Networks |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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