Correlation Between PayPal Holdings and First National
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and First National 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 First National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and First National Financial, you can compare the effects of market volatilities on PayPal Holdings and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and First National.
Diversification Opportunities for PayPal Holdings and First National
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between PayPal and First is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and First National Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Financial 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Financial has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and First National go up and down completely randomly.
Pair Corralation between PayPal Holdings and First National
Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the First National. In addition to that, PayPal Holdings is 2.74 times more volatile than First National Financial. It trades about -0.11 of its total potential returns per unit of risk. First National Financial is currently generating about -0.1 per unit of volatility. If you would invest 4,304 in First National Financial on December 2, 2024 and sell it today you would lose (241.00) from holding First National Financial or give up 5.6% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
PayPal Holdings vs. First National Financial
Performance |
Timeline |
PayPal Holdings |
First National Financial |
PayPal Holdings and First National Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PayPal Holdings and First National
The main advantage of trading using opposite PayPal Holdings and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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