Correlation Between PayPal Holdings and Arcadia Minerals

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

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

Diversification Opportunities for PayPal Holdings and Arcadia Minerals

0.15

Correlation Coefficient

PayPal Holdings  Arcadia Minerals

Average diversification

The 3 months correlation between PayPal and Arcadia is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Arcadia Minerals Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcadia Minerals 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 Arcadia Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcadia Minerals has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Arcadia Minerals go up and down completely randomly.

Pair Corralation between PayPal Holdings and Arcadia Minerals

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Arcadia Minerals. But the stock apears to be less risky and, when comparing its historical volatility, PayPal Holdings is 1.41 times less risky than Arcadia Minerals. The stock trades about -0.13 of its potential returns per unit of risk. The Arcadia Minerals Ltd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.90  in Arcadia Minerals Ltd on December 29, 2024 and sell it today you would earn a total of  0.10  from holding Arcadia Minerals Ltd or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

PayPal Holdings  vs.  Arcadia Minerals Ltd

PayPal Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Arcadia Minerals

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Arcadia Minerals Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Arcadia Minerals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PayPal Holdings and Arcadia Minerals

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

The idea behind PayPal Holdings and Arcadia Minerals Ltd 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.