Correlation Between MSCI ACWI and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both MSCI ACWI 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 MSCI ACWI and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MSCI ACWI exAUCONSUMER and PayPal Holdings, you can compare the effects of market volatilities on MSCI ACWI 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 MSCI ACWI with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of MSCI ACWI and PayPal Holdings.
Diversification Opportunities for MSCI ACWI and PayPal Holdings
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MSCI and PayPal is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MSCI ACWI exAUCONSUMER and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and MSCI ACWI 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 MSCI ACWI exAUCONSUMER 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 MSCI ACWI i.e., MSCI ACWI and PayPal Holdings go up and down completely randomly.
Pair Corralation between MSCI ACWI and PayPal Holdings
Assuming the 90 days horizon MSCI ACWI is expected to generate 4.84 times less return on investment than PayPal Holdings. But when comparing it to its historical volatility, MSCI ACWI exAUCONSUMER is 9.18 times less risky than PayPal Holdings. It trades about 0.15 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,141 in PayPal Holdings on August 25, 2024 and sell it today you would earn a total of 2,536 from holding PayPal Holdings or generate 41.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MSCI ACWI exAUCONSUMER vs. PayPal Holdings
Performance |
| Timeline |
| MSCI ACWI exAUCONSUMER |
| PayPal Holdings |
MSCI ACWI and PayPal Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MSCI ACWI and PayPal Holdings
The main advantage of trading using opposite MSCI ACWI and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MSCI ACWI 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.| MSCI ACWI vs. Harrow Health 8625 | MSCI ACWI vs. Babcock Wilcox Enterprises, | MSCI ACWI vs. Babcock Wilcox Enterprises | MSCI ACWI vs. TRINL |
| PayPal Holdings vs. American Express | PayPal Holdings vs. Morningstar Unconstrained Allocation | PayPal Holdings vs. Sitka Gold Corp | PayPal Holdings vs. MSCI ACWI exAUCONSUMER |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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