Correlation Between NeuPath Health and PayPal Holdings

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

By analyzing existing cross correlation between NeuPath Health and PayPal Holdings CDR, you can compare the effects of market volatilities on NeuPath Health 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 NeuPath Health with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of NeuPath Health and PayPal Holdings.

Diversification Opportunities for NeuPath Health and PayPal Holdings

0.61

Correlation Coefficient

NeuPath Health  PayPal Holdings

Poor diversification

The 3 months correlation between NeuPath and PayPal is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NeuPath Health and PayPal Holdings CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings CDR and NeuPath Health 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 NeuPath Health 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 CDR has no effect on the direction of NeuPath Health i.e., NeuPath Health and PayPal Holdings go up and down completely randomly.

Pair Corralation between NeuPath Health and PayPal Holdings

Assuming the 90 days trading horizon NeuPath Health is expected to generate 1.54 times more return on investment than PayPal Holdings. However, NeuPath Health is 1.54 times more volatile than PayPal Holdings CDR. It trades about 0.04 of its potential returns per unit of risk. PayPal Holdings CDR is currently generating about -0.14 per unit of risk. If you would invest  19.00  in NeuPath Health on December 24, 2024 and sell it today you would earn a total of  1.00  from holding NeuPath Health or generate 5.26% return on investment over 90 days.

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

NeuPath Health  vs.  PayPal Holdings CDR

NeuPath Health

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NeuPath Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NeuPath Health may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PayPal Holdings CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NeuPath Health and PayPal Holdings

The main advantage of trading using opposite NeuPath Health and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NeuPath Health 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.

The idea behind NeuPath Health and PayPal Holdings CDR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.