Correlation Between PayPal Holdings and Virtus Kar

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

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

Diversification Opportunities for PayPal Holdings and Virtus Kar

0.91

Correlation Coefficient

PayPal Holdings  Virtus Kar

Almost no diversification

The 3 months correlation between PayPal and Virtus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Virtus Kar Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Kar Small 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 Virtus Kar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Kar Small has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Virtus Kar go up and down completely randomly.

Pair Corralation between PayPal Holdings and Virtus Kar

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Virtus Kar. In addition to that, PayPal Holdings is 2.25 times more volatile than Virtus Kar Small Cap. It trades about -0.16 of its total potential returns per unit of risk. Virtus Kar Small Cap is currently generating about -0.15 per unit of volatility. If you would invest  2,397  in Virtus Kar Small Cap on December 28, 2024 and sell it today you would lose (242.00) from holding Virtus Kar Small Cap or give up 10.1% of portfolio value over 90 days.

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

PayPal Holdings  vs.  Virtus Kar Small Cap

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 weak 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.

Virtus Kar Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virtus Kar Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with PayPal Holdings and Virtus Kar

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

The idea behind PayPal Holdings and Virtus Kar Small Cap 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.