Correlation Between PayPal Holdings and JD Bancshares

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

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

Diversification Opportunities for PayPal Holdings and JD Bancshares

0.79

Correlation Coefficient

PayPal Holdings  JD Bancshares

Poor diversification

The 3 months correlation between PayPal and JDVB is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and JD Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Bancshares 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 JD Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Bancshares has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and JD Bancshares go up and down completely randomly.

Pair Corralation between PayPal Holdings and JD Bancshares

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.01 times less return on investment than JD Bancshares. In addition to that, PayPal Holdings is 1.72 times more volatile than JD Bancshares. It trades about 0.1 of its total potential returns per unit of risk. JD Bancshares is currently generating about 0.18 per unit of volatility. If you would invest  2,173  in JD Bancshares on September 21, 2024 and sell it today you would earn a total of  277.00  from holding JD Bancshares or generate 12.75% return on investment over 90 days.

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

PayPal Holdings  vs.  JD Bancshares

PayPal Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 8 (%) 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 January 2025.

JD Bancshares

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Bancshares are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JD Bancshares may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PayPal Holdings and JD Bancshares

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

The idea behind PayPal Holdings and JD Bancshares 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..