Correlation Between PayPal Holdings and Toray Industries
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Toray Industries 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 Toray Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Toray Industries, you can compare the effects of market volatilities on PayPal Holdings and Toray Industries 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 Toray Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Toray Industries.
Diversification Opportunities for PayPal Holdings and Toray Industries
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PayPal and Toray is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Toray Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Industries 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 Toray Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toray Industries has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Toray Industries go up and down completely randomly.
Pair Corralation between PayPal Holdings and Toray Industries
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.38 times more return on investment than Toray Industries. However, PayPal Holdings is 2.38 times more volatile than Toray Industries. It trades about 0.13 of its potential returns per unit of risk. Toray Industries is currently generating about 0.28 per unit of risk. If you would invest 8,359 in PayPal Holdings on August 28, 2024 and sell it today you would earn a total of 418.00 from holding PayPal Holdings or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Toray Industries
Performance |
| Timeline |
| PayPal Holdings |
| Toray Industries |
PayPal Holdings and Toray Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Toray Industries
The main advantage of trading using opposite PayPal Holdings and Toray Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Toray Industries 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 Toray Industries will offset losses from the drop in Toray Industries' long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Morningstar Unconstrained Allocation | PayPal Holdings vs. Sitka Gold Corp | PayPal Holdings vs. MSCI ACWI exAUCONSUMER |
| Toray Industries vs. Unifi Inc | Toray Industries vs. Albany International | Toray Industries vs. Sumitomo Electric Industries | Toray Industries vs. Sekisui House |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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