Correlation Between PayPal Holdings and Kubota

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Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Kubota 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 Kubota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Kubota, you can compare the effects of market volatilities on PayPal Holdings and Kubota 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 Kubota. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Kubota.

Diversification Opportunities for PayPal Holdings and Kubota

PayPalKubotaDiversified AwayPayPalKubotaDiversified Away100%
-0.79
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between PayPal Holdings and Kubota

Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.91 times more return on investment than Kubota. However, PayPal Holdings is 1.1 times less risky than Kubota. It trades about 0.15 of its potential returns per unit of risk. Kubota is currently generating about -0.17 per unit of risk. If you would invest  7,757  in PayPal Holdings on September 19, 2024 and sell it today you would earn a total of  1,329  from holding PayPal Holdings or generate 17.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PayPal Holdings  vs.  Kubota

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1001020
JavaScript chart by amCharts 3.21.15PYPL KUBTF
       Timeline  
PayPal Holdings 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 12 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec808590
Kubota 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Kubota has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1212.51313.51414.5

PayPal Holdings and Kubota Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.55-4.15-2.76-1.370.01.553.14.656.19 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15PYPL KUBTF
       Returns  

Pair Trading with PayPal Holdings and Kubota

The main advantage of trading using opposite PayPal Holdings and Kubota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Kubota 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 Kubota will offset losses from the drop in Kubota's long position.
The idea behind PayPal Holdings and Kubota 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.
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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