Correlation Between PayPal Holdings and 718546AK0

Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and 718546AK0 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 718546AK0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PayPal Holdings and PHILLIPS 66 465, you can compare the effects of market volatilities on PayPal Holdings and 718546AK0 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 718546AK0. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and 718546AK0.

Diversification Opportunities for PayPal Holdings and 718546AK0

-0.68

Correlation Coefficient

PayPal Holdings  718546AK0

Excellent diversification

The 3 months correlation between PayPal and 718546AK0 is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and PHILLIPS 66 465 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHILLIPS 66 465 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 718546AK0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHILLIPS 66 465 has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and 718546AK0 go up and down completely randomly.

Pair Corralation between PayPal Holdings and 718546AK0

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.78 times more return on investment than 718546AK0. However, PayPal Holdings is 1.78 times more volatile than PHILLIPS 66 465. It trades about 0.2 of its potential returns per unit of risk. PHILLIPS 66 465 is currently generating about -0.13 per unit of risk. If you would invest  7,107  in PayPal Holdings on September 15, 2024 and sell it today you would earn a total of  1,833  from holding PayPal Holdings or generate 25.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

PayPal Holdings  vs.  PHILLIPS 66 465

PayPal Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

PHILLIPS 66 465

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PHILLIPS 66 465 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PHILLIPS 66 465 investors.

Pair Trading with PayPal Holdings and 718546AK0

The main advantage of trading using opposite PayPal Holdings and 718546AK0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, 718546AK0 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 718546AK0 will offset losses from the drop in 718546AK0's long position.

The idea behind PayPal Holdings and PHILLIPS 66 465 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .