Correlation Between PayPal Holdings and WALMART

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Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and WALMART 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 WALMART into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and WALMART INC 4, you can compare the effects of market volatilities on PayPal Holdings and WALMART 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 WALMART. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and WALMART.

Diversification Opportunities for PayPal Holdings and WALMART

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between PayPal and WALMART is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and WALMART INC 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WALMART INC 4 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 WALMART. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WALMART INC 4 has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and WALMART go up and down completely randomly.

Pair Corralation between PayPal Holdings and WALMART

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the WALMART. In addition to that, PayPal Holdings is 3.41 times more volatile than WALMART INC 4. It trades about -0.29 of its total potential returns per unit of risk. WALMART INC 4 is currently generating about 0.19 per unit of volatility. If you would invest  8,495  in WALMART INC 4 on November 28, 2024 and sell it today you would earn a total of  215.00  from holding WALMART INC 4 or generate 2.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy68.18%
ValuesDaily Returns

PayPal Holdings  vs.  WALMART INC 4

 Performance 
       Timeline  
PayPal Holdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
WALMART INC 4 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days WALMART INC 4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PayPal Holdings and WALMART Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PayPal Holdings and WALMART

The main advantage of trading using opposite PayPal Holdings and WALMART positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, WALMART 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 WALMART will offset losses from the drop in WALMART's long position.
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The idea behind PayPal Holdings and WALMART INC 4 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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