Correlation Between PayPal Holdings and Dfa One-year

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

By analyzing existing cross correlation between PayPal Holdings and Dfa One Year Fixed, you can compare the effects of market volatilities on PayPal Holdings and Dfa One-year 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 Dfa One-year. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Dfa One-year.

Diversification Opportunities for PayPal Holdings and Dfa One-year

-0.62

Correlation Coefficient

PayPal Holdings  Dfa One-year

Excellent diversification

The 3 months correlation between PayPal and Dfa is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Dfa One Year Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa One Year 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 Dfa One-year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa One Year has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Dfa One-year go up and down completely randomly.

Pair Corralation between PayPal Holdings and Dfa One-year

Given the investment horizon of 90 days PayPal Holdings is expected to generate 46.17 times more return on investment than Dfa One-year. However, PayPal Holdings is 46.17 times more volatile than Dfa One Year Fixed. It trades about 0.01 of its potential returns per unit of risk. Dfa One Year Fixed is currently generating about 0.39 per unit of risk. If you would invest  7,261  in PayPal Holdings on December 2, 2024 and sell it today you would lose (156.00) from holding PayPal Holdings or give up 2.15% of portfolio value over 90 days.

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

PayPal Holdings  vs.  Dfa One Year Fixed

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.

Dfa One Year

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa One Year Fixed are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Dfa One-year is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PayPal Holdings and Dfa One-year

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

The idea behind PayPal Holdings and Dfa One Year Fixed 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.