Correlation Between PayPal Holdings and Marubeni

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

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

Diversification Opportunities for PayPal Holdings and Marubeni

-0.49

Correlation Coefficient

PayPal Holdings  Marubeni

Very good diversification

The 3 months correlation between PayPal and Marubeni is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Marubeni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marubeni 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 Marubeni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marubeni has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Marubeni go up and down completely randomly.

Pair Corralation between PayPal Holdings and Marubeni

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Marubeni. But the stock apears to be less risky and, when comparing its historical volatility, PayPal Holdings is 1.52 times less risky than Marubeni. The stock trades about -0.11 of its potential returns per unit of risk. The Marubeni is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,588  in Marubeni on December 2, 2024 and sell it today you would earn a total of  2.00  from holding Marubeni or generate 0.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PayPal Holdings  vs.  Marubeni

PayPal Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Marubeni

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marubeni are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Marubeni 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 Marubeni

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

The idea behind PayPal Holdings and Marubeni 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.