Correlation Between PayPal Holdings and Waste Connections
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Waste Connections 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 Waste Connections into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Waste Connections, you can compare the effects of market volatilities on PayPal Holdings and Waste Connections 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 Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Waste Connections.
Diversification Opportunities for PayPal Holdings and Waste Connections
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Waste is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections 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 Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Waste Connections go up and down completely randomly.
Pair Corralation between PayPal Holdings and Waste Connections
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.22 times less return on investment than Waste Connections. In addition to that, PayPal Holdings is 1.46 times more volatile than Waste Connections. It trades about 0.26 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.46 per unit of volatility. If you would invest 16,274 in Waste Connections on September 5, 2024 and sell it today you would earn a total of 1,911 from holding Waste Connections or generate 11.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PayPal Holdings vs. Waste Connections
Performance |
| Timeline |
| PayPal Holdings |
| Waste Connections |
PayPal Holdings and Waste Connections Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Waste Connections
The main advantage of trading using opposite PayPal Holdings and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Waste Connections 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 Waste Connections will offset losses from the drop in Waste Connections' long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
| Waste Connections vs. Westlake Chemical | Waste Connections vs. SEKISUI CHEMICAL | Waste Connections vs. Hyster Yale Materials Handling | Waste Connections vs. Goodyear Tire Rubber |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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