Correlation Between PayPal Holdings and Medicenna Therapeutics

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

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

Diversification Opportunities for PayPal Holdings and Medicenna Therapeutics

-0.68

Correlation Coefficient

PayPal Holdings  Medicenna Therapeutics

Excellent diversification

The 3 months correlation between PayPal and Medicenna is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and Medicenna Therapeutics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medicenna Therapeutics 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 CDR are associated (or correlated) with Medicenna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medicenna Therapeutics has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Medicenna Therapeutics go up and down completely randomly.

Pair Corralation between PayPal Holdings and Medicenna Therapeutics

Assuming the 90 days trading horizon PayPal Holdings CDR is expected to generate 0.43 times more return on investment than Medicenna Therapeutics. However, PayPal Holdings CDR is 2.33 times less risky than Medicenna Therapeutics. It trades about 0.17 of its potential returns per unit of risk. Medicenna Therapeutics Corp is currently generating about -0.04 per unit of risk. If you would invest  442.00  in PayPal Holdings CDR on October 26, 2024 and sell it today you would earn a total of  222.00  from holding PayPal Holdings CDR or generate 50.23% return on investment over 90 days.

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

PayPal Holdings CDR  vs.  Medicenna Therapeutics Corp

PayPal Holdings CDR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings CDR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Medicenna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medicenna Therapeutics Corp 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 basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with PayPal Holdings and Medicenna Therapeutics

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

The idea behind PayPal Holdings CDR and Medicenna Therapeutics Corp 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.