Correlation Between PayPal Holdings and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Woolworths Group 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 Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Woolworths Group Limited, you can compare the effects of market volatilities on PayPal Holdings and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Woolworths Group.
Diversification Opportunities for PayPal Holdings and Woolworths Group
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Woolworths is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Woolworths Group go up and down completely randomly.
Pair Corralation between PayPal Holdings and Woolworths Group
Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.62 times more return on investment than Woolworths Group. However, PayPal Holdings is 1.62 times less risky than Woolworths Group. It trades about 0.1 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.22 per unit of risk. If you would invest 8,359 in PayPal Holdings on August 27, 2024 and sell it today you would earn a total of 318.00 from holding PayPal Holdings or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Woolworths Group Limited
Performance |
| Timeline |
| PayPal Holdings |
| Woolworths Group |
PayPal Holdings and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Woolworths Group
The main advantage of trading using opposite PayPal Holdings and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| PayPal Holdings vs. American Express | PayPal Holdings vs. Morningstar Unconstrained Allocation | PayPal Holdings vs. Sitka Gold Corp | PayPal Holdings vs. MSCI ACWI exAUCONSUMER |
| Woolworths Group vs. Tesco PLC | Woolworths Group vs. Tesco PLC | Woolworths Group vs. Ocado Group PLC | Woolworths Group vs. Dairy Farm International |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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