Correlation Between PayPal Holdings and Green Impact

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

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

Diversification Opportunities for PayPal Holdings and Green Impact

-0.59

Correlation Coefficient

PayPal Holdings  Green Impact

Excellent diversification

The 3 months correlation between PayPal and Green is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Green Impact Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Impact Partners 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 Green Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Impact Partners has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Green Impact go up and down completely randomly.

Pair Corralation between PayPal Holdings and Green Impact

Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.58 times more return on investment than Green Impact. However, PayPal Holdings is 1.72 times less risky than Green Impact. It trades about 0.02 of its potential returns per unit of risk. Green Impact Partners is currently generating about -0.01 per unit of risk. If you would invest  8,018  in PayPal Holdings on October 7, 2024 and sell it today you would earn a total of  742.00  from holding PayPal Holdings or generate 9.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

PayPal Holdings  vs.  Green Impact Partners

PayPal Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Green Impact Partners

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PayPal Holdings and Green Impact

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

The idea behind PayPal Holdings and Green Impact Partners 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.