Correlation Between PayPal Holdings and Arctic Gold

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

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

Diversification Opportunities for PayPal Holdings and Arctic Gold

0.21

Correlation Coefficient

PayPal Holdings  Arctic Gold

Modest diversification

The 3 months correlation between PayPal and Arctic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Arctic Gold Publ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Gold Publ 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 Arctic Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Gold Publ has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Arctic Gold go up and down completely randomly.

Pair Corralation between PayPal Holdings and Arctic Gold

Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.32 times more return on investment than Arctic Gold. However, PayPal Holdings is 3.1 times less risky than Arctic Gold. It trades about 0.15 of its potential returns per unit of risk. Arctic Gold Publ is currently generating about 0.0 per unit of risk. If you would invest  8,026  in PayPal Holdings on September 5, 2024 and sell it today you would earn a total of  907.00  from holding PayPal Holdings or generate 11.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

PayPal Holdings  vs.  Arctic Gold Publ

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.

Arctic Gold Publ

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Gold Publ are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Arctic Gold may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PayPal Holdings and Arctic Gold

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

The idea behind PayPal Holdings and Arctic Gold Publ 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.