Correlation Between PayPal Holdings and United Internet
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and United Internet 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 United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and United Internet AG, you can compare the effects of market volatilities on PayPal Holdings and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and United Internet.
Diversification Opportunities for PayPal Holdings and United Internet
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between PayPal and United is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and United Internet go up and down completely randomly.
Pair Corralation between PayPal Holdings and United Internet
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.42 times more return on investment than United Internet. However, PayPal Holdings is 2.36 times less risky than United Internet. It trades about 0.07 of its potential returns per unit of risk. United Internet AG is currently generating about -0.16 per unit of risk. If you would invest 8,694 in PayPal Holdings on September 12, 2024 and sell it today you would earn a total of 182.00 from holding PayPal Holdings or generate 2.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PayPal Holdings vs. United Internet AG
Performance |
| Timeline |
| PayPal Holdings |
| United Internet AG |
PayPal Holdings and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and United Internet
The main advantage of trading using opposite PayPal Holdings and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally Financial |
| United Internet vs. Superior Plus Corp | United Internet vs. SIVERS SEMICONDUCTORS AB | United Internet vs. Norsk Hydro ASA | United Internet vs. Reliance Steel Aluminum |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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