Correlation Between INGEVITY and PayPal Holdings

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

By analyzing existing cross correlation between INGEVITY P 3875 and PayPal Holdings, you can compare the effects of market volatilities on INGEVITY and PayPal Holdings 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 INGEVITY with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of INGEVITY and PayPal Holdings.

Diversification Opportunities for INGEVITY and PayPal Holdings

-0.29

Correlation Coefficient

INGEVITY  PayPal Holdings

Very good diversification

The 3 months correlation between INGEVITY and PayPal is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding INGEVITY P 3875 and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and INGEVITY 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 INGEVITY P 3875 are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of INGEVITY i.e., INGEVITY and PayPal Holdings go up and down completely randomly.

Pair Corralation between INGEVITY and PayPal Holdings

Assuming the 90 days trading horizon INGEVITY P 3875 is expected to generate 30.33 times more return on investment than PayPal Holdings. However, INGEVITY is 30.33 times more volatile than PayPal Holdings. It trades about 0.06 of its potential returns per unit of risk. PayPal Holdings is currently generating about 0.03 per unit of risk. If you would invest  8,638  in INGEVITY P 3875 on September 19, 2024 and sell it today you would earn a total of  525.00  from holding INGEVITY P 3875 or generate 6.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.91%
Values	Daily Returns

INGEVITY P 3875  vs.  PayPal Holdings

INGEVITY P 3875

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGEVITY P 3875 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGEVITY is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

PayPal Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with INGEVITY and PayPal Holdings

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

The idea behind INGEVITY P 3875 and PayPal Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.