Correlation Between PayPal Holdings and ORIX

Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and ORIX 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 ORIX into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PayPal Holdings and ORIX Corporation, you can compare the effects of market volatilities on PayPal Holdings and ORIX 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 ORIX. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and ORIX.

Diversification Opportunities for PayPal Holdings and ORIX

0.5

Correlation Coefficient

PayPal Holdings  ORIX

Very weak diversification

The 3 months correlation between PayPal and ORIX is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and ORIX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX 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 ORIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and ORIX go up and down completely randomly.

Pair Corralation between PayPal Holdings and ORIX

Assuming the 90 days horizon PayPal Holdings is expected to under-perform the ORIX. In addition to that, PayPal Holdings is 1.48 times more volatile than ORIX Corporation. It trades about -0.1 of its total potential returns per unit of risk. ORIX Corporation is currently generating about -0.07 per unit of volatility. If you would invest  2,100  in ORIX Corporation on November 29, 2024 and sell it today you would lose (160.00) from holding ORIX Corporation or give up 7.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PayPal Holdings  vs.  ORIX Corp.

PayPal Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ORIX

Risk-Adjusted Performance

Very Weak

Over the last 90 days ORIX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PayPal Holdings and ORIX

The main advantage of trading using opposite PayPal Holdings and ORIX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, ORIX 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 ORIX will offset losses from the drop in ORIX's long position.

The idea behind PayPal Holdings and ORIX Corporation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.