Correlation Between PayPal Holdings and Putnam Sustainable

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

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

Diversification Opportunities for PayPal Holdings and Putnam Sustainable

0.2

Correlation Coefficient

PayPal Holdings  Putnam Sustainable

Modest diversification

The 3 months correlation between PayPal and Putnam is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Putnam Sustainable Future in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Sustainable Future 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 Putnam Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Sustainable Future has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Putnam Sustainable go up and down completely randomly.

Pair Corralation between PayPal Holdings and Putnam Sustainable

Given the investment horizon of 90 days PayPal Holdings is expected to generate 2.6 times less return on investment than Putnam Sustainable. In addition to that, PayPal Holdings is 2.06 times more volatile than Putnam Sustainable Future. It trades about 0.01 of its total potential returns per unit of risk. Putnam Sustainable Future is currently generating about 0.05 per unit of volatility. If you would invest  1,566  in Putnam Sustainable Future on December 2, 2024 and sell it today you would earn a total of  450.00  from holding Putnam Sustainable Future or generate 28.74% return on investment over 90 days.

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

PayPal Holdings  vs.  Putnam Sustainable Future

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.

Putnam Sustainable Future

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Sustainable Future has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with PayPal Holdings and Putnam Sustainable

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

The idea behind PayPal Holdings and Putnam Sustainable Future 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.