Correlation Between PayPal Holdings and AUPU Home

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

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

Diversification Opportunities for PayPal Holdings and AUPU Home

0.84

Correlation Coefficient

PayPal Holdings  AUPU Home

Very poor diversification

The 3 months correlation between PayPal and AUPU is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and AUPU Home Style in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUPU Home Style 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 AUPU Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUPU Home Style has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and AUPU Home go up and down completely randomly.

Pair Corralation between PayPal Holdings and AUPU Home

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.16 times less return on investment than AUPU Home. But when comparing it to its historical volatility, PayPal Holdings is 1.31 times less risky than AUPU Home. It trades about 0.15 of its potential returns per unit of risk. AUPU Home Style is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  950.00  in AUPU Home Style on September 5, 2024 and sell it today you would earn a total of  174.00  from holding AUPU Home Style or generate 18.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	89.06%
Values	Daily Returns

PayPal Holdings  vs.  AUPU Home Style

PayPal Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

AUPU Home Style

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AUPU Home Style are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AUPU Home sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PayPal Holdings and AUPU Home

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

The idea behind PayPal Holdings and AUPU Home Style 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.