Correlation Between PayPal Holdings and Kimberly Clark

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

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

Diversification Opportunities for PayPal Holdings and Kimberly Clark

-0.16

Correlation Coefficient

PayPal Holdings  Kimberly Clark

Good diversification

The 3 months correlation between PayPal and Kimberly is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Kimberly Clark de Mexico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark de 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 Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark de has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Kimberly Clark go up and down completely randomly.

Pair Corralation between PayPal Holdings and Kimberly Clark

Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.95 times more return on investment than Kimberly Clark. However, PayPal Holdings is 1.05 times less risky than Kimberly Clark. It trades about 0.15 of its potential returns per unit of risk. Kimberly Clark de Mexico is currently generating about 0.07 per unit of risk. If you would invest  8,678  in PayPal Holdings on October 20, 2024 and sell it today you would earn a total of  503.00  from holding PayPal Holdings or generate 5.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

PayPal Holdings  vs.  Kimberly Clark de Mexico

PayPal Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Kimberly Clark de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kimberly Clark de Mexico has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Kimberly Clark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with PayPal Holdings and Kimberly Clark

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

The idea behind PayPal Holdings and Kimberly Clark de Mexico 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.