Correlation Between PayPal Holdings and Sun Peak

Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Sun Peak 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 Sun Peak 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 Sun Peak Metals, you can compare the effects of market volatilities on PayPal Holdings and Sun Peak 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 Sun Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Sun Peak.

Diversification Opportunities for PayPal Holdings and Sun Peak

-0.78

Correlation Coefficient

PayPal Holdings  Sun Peak

Pay attention - limited upside

The 3 months correlation between PayPal and Sun is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and Sun Peak Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Peak Metals 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 Sun Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Peak Metals has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Sun Peak go up and down completely randomly.

Pair Corralation between PayPal Holdings and Sun Peak

Assuming the 90 days trading horizon PayPal Holdings CDR is expected to generate 0.4 times more return on investment than Sun Peak. However, PayPal Holdings CDR is 2.48 times less risky than Sun Peak. It trades about -0.01 of its potential returns per unit of risk. Sun Peak Metals is currently generating about -0.04 per unit of risk. If you would invest  659.00  in PayPal Holdings CDR on October 11, 2024 and sell it today you would lose (6.00) from holding PayPal Holdings CDR or give up 0.91% of portfolio value over 90 days.

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

PayPal Holdings CDR  vs.  Sun Peak Metals

PayPal Holdings CDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sun Peak Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sun Peak Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with PayPal Holdings and Sun Peak

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

The idea behind PayPal Holdings CDR and Sun Peak Metals 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.