Correlation Between PayPal Holdings and IShares AEX
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and IShares AEX 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 IShares AEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and iShares AEX UCITS, you can compare the effects of market volatilities on PayPal Holdings and IShares AEX 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 IShares AEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and IShares AEX.
Diversification Opportunities for PayPal Holdings and IShares AEX
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PayPal and IShares is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and iShares AEX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares AEX UCITS 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 IShares AEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares AEX UCITS has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and IShares AEX go up and down completely randomly.
Pair Corralation between PayPal Holdings and IShares AEX
Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.37 times more return on investment than IShares AEX. However, PayPal Holdings is 2.37 times more volatile than iShares AEX UCITS. It trades about 0.21 of its potential returns per unit of risk. iShares AEX UCITS is currently generating about 0.01 per unit of risk. 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 | Moves Against |
Strength | Insignificant |
Accuracy | 98.44% |
Values | Daily Returns |
PayPal Holdings vs. iShares AEX UCITS
Performance |
Timeline |
PayPal Holdings |
iShares AEX UCITS |
PayPal Holdings and IShares AEX Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PayPal Holdings and IShares AEX
The main advantage of trading using opposite PayPal Holdings and IShares AEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, IShares AEX 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 IShares AEX will offset losses from the drop in IShares AEX's long position.PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Mastercard |
IShares AEX vs. Vanguard SP 500 | IShares AEX vs. iShares II Public | IShares AEX vs. Vanguard FTSE All World | IShares AEX vs. iShares SP 500 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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