Correlation Between Regional Management and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Regional Management and PayPal Holdings 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 Regional Management and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and PayPal Holdings, you can compare the effects of market volatilities on Regional Management and PayPal Holdings 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 Regional Management with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and PayPal Holdings.
Diversification Opportunities for Regional Management and PayPal Holdings
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regional and PayPal is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and Regional Management 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 Regional Management Corp are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Regional Management i.e., Regional Management and PayPal Holdings go up and down completely randomly.
Pair Corralation between Regional Management and PayPal Holdings
Allowing for the 90-day total investment horizon Regional Management is expected to generate 1.27 times less return on investment than PayPal Holdings. In addition to that, Regional Management is 1.83 times more volatile than PayPal Holdings. It trades about 0.12 of its total potential returns per unit of risk. PayPal Holdings is currently generating about 0.29 per unit of volatility. If you would invest 7,822 in PayPal Holdings on August 31, 2024 and sell it today you would earn a total of 835.00 from holding PayPal Holdings or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. PayPal Holdings
Performance |
| Timeline |
| Regional Management Corp |
| PayPal Holdings |
Regional Management and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and PayPal Holdings
The main advantage of trading using opposite Regional Management and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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