Correlation Between PayPal Holdings and Digatrade Financial

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

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

Diversification Opportunities for PayPal Holdings and Digatrade Financial

0.0

Correlation Coefficient

PayPal Holdings  Digatrade Financial

Pay attention - limited upside

The 3 months correlation between PayPal and Digatrade is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Digatrade Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digatrade Financial Corp 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 Digatrade Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digatrade Financial Corp has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Digatrade Financial go up and down completely randomly.

Pair Corralation between PayPal Holdings and Digatrade Financial

If you would invest  7,036  in PayPal Holdings on September 12, 2024 and sell it today you would earn a total of  1,840  from holding PayPal Holdings or generate 26.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PayPal Holdings  vs.  Digatrade Financial Corp

PayPal Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 16 (%) 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.

Digatrade Financial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Digatrade Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Digatrade Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PayPal Holdings and Digatrade Financial

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

The idea behind PayPal Holdings and Digatrade Financial Corp 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.