Correlation Between PayPal Holdings and Sable Resources

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

Diversification Opportunities for PayPal Holdings and Sable Resources

-0.33

Correlation Coefficient

PayPal Holdings  Sable Resources

Very good diversification

The 3 months correlation between PayPal and Sable is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and Sable Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Resources 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 Sable Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Resources has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Sable Resources go up and down completely randomly.

Pair Corralation between PayPal Holdings and Sable Resources

Assuming the 90 days trading horizon PayPal Holdings CDR is expected to under-perform the Sable Resources. But the stock apears to be less risky and, when comparing its historical volatility, PayPal Holdings CDR is 4.07 times less risky than Sable Resources. The stock trades about -0.13 of its potential returns per unit of risk. The Sable Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Sable Resources on December 21, 2024 and sell it today you would earn a total of  0.50  from holding Sable Resources or generate 14.29% return on investment over 90 days.

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

PayPal Holdings CDR  vs.  Sable Resources

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 abnormal 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.

Sable Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sable Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Sable Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PayPal Holdings and Sable Resources

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

The idea behind PayPal Holdings CDR and Sable Resources 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.