Correlation Between PayPal Holdings and 3BB INTERNET

Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and 3BB INTERNET 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 3BB INTERNET into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PayPal Holdings and 3BB INTERNET INFRASTRUCTURE, you can compare the effects of market volatilities on PayPal Holdings and 3BB INTERNET 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 3BB INTERNET. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and 3BB INTERNET.

Diversification Opportunities for PayPal Holdings and 3BB INTERNET

0.17

Correlation Coefficient

PayPal Holdings  3BB INTERNET

Average diversification

The 3 months correlation between PayPal and 3BB is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and 3BB INTERNET INFRASTRUCTURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3BB INTERNET INFRAST 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 3BB INTERNET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3BB INTERNET INFRAST has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and 3BB INTERNET go up and down completely randomly.

Pair Corralation between PayPal Holdings and 3BB INTERNET

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.05 times more return on investment than 3BB INTERNET. However, PayPal Holdings is 1.05 times more volatile than 3BB INTERNET INFRASTRUCTURE. It trades about 0.16 of its potential returns per unit of risk. 3BB INTERNET INFRASTRUCTURE is currently generating about 0.07 per unit of risk. If you would invest  7,261  in PayPal Holdings on September 4, 2024 and sell it today you would earn a total of  1,392  from holding PayPal Holdings or generate 19.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

PayPal Holdings  vs.  3BB INTERNET INFRASTRUCTURE

PayPal Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

3BB INTERNET INFRAST

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 3BB INTERNET INFRASTRUCTURE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, 3BB INTERNET may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PayPal Holdings and 3BB INTERNET

The main advantage of trading using opposite PayPal Holdings and 3BB INTERNET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, 3BB INTERNET 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 3BB INTERNET will offset losses from the drop in 3BB INTERNET's long position.

The idea behind PayPal Holdings and 3BB INTERNET INFRASTRUCTURE 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.