Correlation Between PayPal Holdings and Active International

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

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

Diversification Opportunities for PayPal Holdings and Active International

-0.77

Correlation Coefficient

PayPal Holdings  Active International

Pay attention - limited upside

The 3 months correlation between PayPal and Active is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Active International Allocatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Active International 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 Active International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Active International has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Active International go up and down completely randomly.

Pair Corralation between PayPal Holdings and Active International

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Active International. In addition to that, PayPal Holdings is 2.99 times more volatile than Active International Allocation. It trades about -0.13 of its total potential returns per unit of risk. Active International Allocation is currently generating about 0.2 per unit of volatility. If you would invest  1,555  in Active International Allocation on December 29, 2024 and sell it today you would earn a total of  169.00  from holding Active International Allocation or generate 10.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

PayPal Holdings  vs.  Active International Allocatio

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.

Active International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Active International Allocation are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Active International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PayPal Holdings and Active International

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

The idea behind PayPal Holdings and Active International Allocation 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 Transaction History module to view history of all your transactions and understand their impact on performance.