Correlation Between PayPal Holdings and Orange County

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

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

Diversification Opportunities for PayPal Holdings and Orange County

0.48

Correlation Coefficient

PayPal Holdings  Orange County

Very weak diversification

The 3 months correlation between PayPal and Orange is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Orange County Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange County Bancorp 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 Orange County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange County Bancorp has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Orange County go up and down completely randomly.

Pair Corralation between PayPal Holdings and Orange County

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Orange County. In addition to that, PayPal Holdings is 1.68 times more volatile than Orange County Bancorp. It trades about -0.33 of its total potential returns per unit of risk. Orange County Bancorp is currently generating about -0.05 per unit of volatility. If you would invest  2,599  in Orange County Bancorp on December 1, 2024 and sell it today you would lose (62.00) from holding Orange County Bancorp or give up 2.39% of portfolio value over 90 days.

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

PayPal Holdings  vs.  Orange County Bancorp

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.

Orange County Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orange County Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PayPal Holdings and Orange County

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

The idea behind PayPal Holdings and Orange County Bancorp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..