Correlation Between PayPal Holdings and Compagnie Gnrale

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

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

Diversification Opportunities for PayPal Holdings and Compagnie Gnrale

-0.37

Correlation Coefficient

PayPal Holdings  Compagnie Gnrale

Very good diversification

The 3 months correlation between PayPal and Compagnie is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Compagnie Gnrale des in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Gnrale des 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 Compagnie Gnrale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Gnrale des has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Compagnie Gnrale go up and down completely randomly.

Pair Corralation between PayPal Holdings and Compagnie Gnrale

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.19 times less return on investment than Compagnie Gnrale. But when comparing it to its historical volatility, PayPal Holdings is 1.84 times less risky than Compagnie Gnrale. It trades about 0.15 of its potential returns per unit of risk. Compagnie Gnrale des is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,201  in Compagnie Gnrale des on October 22, 2024 and sell it today you would earn a total of  178.00  from holding Compagnie Gnrale des or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

PayPal Holdings  vs.  Compagnie Gnrale des

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 disclosed solid returns over the last few months and may actually be approaching a breakup point.

Compagnie Gnrale des

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compagnie Gnrale des has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Compagnie Gnrale 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 Compagnie Gnrale

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

The idea behind PayPal Holdings and Compagnie Gnrale des 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.