Correlation Between PayPal Holdings and Remy Cointreau
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Remy Cointreau 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 Remy Cointreau into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Remy Cointreau SA, you can compare the effects of market volatilities on PayPal Holdings and Remy Cointreau 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 Remy Cointreau. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Remy Cointreau.
Diversification Opportunities for PayPal Holdings and Remy Cointreau
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Remy is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Remy Cointreau SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Remy Cointreau SA 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 Remy Cointreau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Remy Cointreau SA has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Remy Cointreau go up and down completely randomly.
Pair Corralation between PayPal Holdings and Remy Cointreau
Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Remy Cointreau. But the stock apears to be less risky and, when comparing its historical volatility, PayPal Holdings is 1.02 times less risky than Remy Cointreau. The stock trades about -0.15 of its potential returns per unit of risk. The Remy Cointreau SA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 607.00 in Remy Cointreau SA on December 4, 2024 and sell it today you would lose (85.00) from holding Remy Cointreau SA or give up 14.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
PayPal Holdings vs. Remy Cointreau SA
Performance |
Timeline |
PayPal Holdings |
Remy Cointreau SA |
PayPal Holdings and Remy Cointreau Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PayPal Holdings and Remy Cointreau
The main advantage of trading using opposite PayPal Holdings and Remy Cointreau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Remy Cointreau 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 Remy Cointreau will offset losses from the drop in Remy Cointreau's long position.PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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