Correlation Between PayPal Holdings and Exxon
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Exxon 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 Exxon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Exxon Mobil Corp, you can compare the effects of market volatilities on PayPal Holdings and Exxon 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 Exxon. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Exxon.
Diversification Opportunities for PayPal Holdings and Exxon
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PayPal and Exxon is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Exxon Mobil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exxon Mobil Corp 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 Exxon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exxon Mobil Corp has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Exxon go up and down completely randomly.
Pair Corralation between PayPal Holdings and Exxon
Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.62 times more return on investment than Exxon. However, PayPal Holdings is 1.62 times more volatile than Exxon Mobil Corp. It trades about 0.14 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about -0.2 per unit of risk. If you would invest 8,067 in PayPal Holdings on September 13, 2024 and sell it today you would earn a total of 873.00 from holding PayPal Holdings or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PayPal Holdings vs. Exxon Mobil Corp
Performance |
| Timeline |
| PayPal Holdings |
| Exxon Mobil Corp |
PayPal Holdings and Exxon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PayPal Holdings and Exxon
The main advantage of trading using opposite PayPal Holdings and Exxon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Exxon 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 Exxon will offset losses from the drop in Exxon's long position.| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. American Express |
| Exxon vs. Aquagold International | Exxon vs. Thrivent High Yield | Exxon vs. Morningstar Unconstrained Allocation | Exxon vs. Via Renewables |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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