Correlation Between PayPal Holdings and PARKER

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

Diversification Opportunities for PayPal Holdings and PARKER

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PayPal and PARKER is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and PARKER HANNIFIN P MEDIUM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PARKER HANNIFIN P 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 PARKER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PARKER HANNIFIN P has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and PARKER go up and down completely randomly.

Pair Corralation between PayPal Holdings and PARKER

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.32 times more return on investment than PARKER. However, PayPal Holdings is 1.32 times more volatile than PARKER HANNIFIN P MEDIUM. It trades about 0.08 of its potential returns per unit of risk. PARKER HANNIFIN P MEDIUM is currently generating about -0.13 per unit of risk. If you would invest  8,731  in PayPal Holdings on September 14, 2024 and sell it today you would earn a total of  209.00  from holding PayPal Holdings or generate 2.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

PayPal Holdings  vs.  PARKER HANNIFIN P MEDIUM

 Performance 
       Timeline  
PayPal Holdings 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 16 (%) 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.
PARKER HANNIFIN P 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days PARKER HANNIFIN P MEDIUM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PARKER HANNIFIN P MEDIUM investors.

PayPal Holdings and PARKER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PayPal Holdings and PARKER

The main advantage of trading using opposite PayPal Holdings and PARKER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, PARKER 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 PARKER will offset losses from the drop in PARKER's long position.
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The idea behind PayPal Holdings and PARKER HANNIFIN P MEDIUM 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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