Correlation Between PayPal Holdings and APPLE

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Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and APPLE 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 APPLE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and APPLE INC 32, you can compare the effects of market volatilities on PayPal Holdings and APPLE 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 APPLE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and APPLE.

Diversification Opportunities for PayPal Holdings and APPLE

-0.76
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between PayPal and APPLE is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and APPLE INC 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLE INC 32 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 APPLE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLE INC 32 has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and APPLE go up and down completely randomly.

Pair Corralation between PayPal Holdings and APPLE

Given the investment horizon of 90 days PayPal Holdings is expected to generate 3.36 times more return on investment than APPLE. However, PayPal Holdings is 3.36 times more volatile than APPLE INC 32. It trades about 0.2 of its potential returns per unit of risk. APPLE INC 32 is currently generating about -0.21 per unit of risk. If you would invest  8,028  in PayPal Holdings on August 30, 2024 and sell it today you would earn a total of  629.00  from holding PayPal Holdings or generate 7.84% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

PayPal Holdings  vs.  APPLE INC 32

 Performance 
       Timeline  
PayPal Holdings 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.
APPLE INC 32 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days APPLE INC 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APPLE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PayPal Holdings and APPLE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PayPal Holdings and APPLE

The main advantage of trading using opposite PayPal Holdings and APPLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, APPLE 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 APPLE will offset losses from the drop in APPLE's long position.
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The idea behind PayPal Holdings and APPLE INC 32 pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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