Correlation Between Wilmington Capital and PayPal Holdings

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

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

Diversification Opportunities for Wilmington Capital and PayPal Holdings

-0.36

Correlation Coefficient

Wilmington Capital  PayPal Holdings

Very good diversification

The 3 months correlation between Wilmington and PayPal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Wilmington Capital Management and PayPal Holdings CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings CDR and Wilmington Capital 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 Wilmington Capital Management 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 CDR has no effect on the direction of Wilmington Capital i.e., Wilmington Capital and PayPal Holdings go up and down completely randomly.

Pair Corralation between Wilmington Capital and PayPal Holdings

Assuming the 90 days trading horizon Wilmington Capital Management is expected to under-perform the PayPal Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Wilmington Capital Management is 22.78 times less risky than PayPal Holdings. The stock trades about -0.23 of its potential returns per unit of risk. The PayPal Holdings CDR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  645.00  in PayPal Holdings CDR on October 24, 2024 and sell it today you would earn a total of  22.00  from holding PayPal Holdings CDR or generate 3.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Wilmington Capital Management  vs.  PayPal Holdings CDR

Wilmington Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilmington Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

PayPal Holdings CDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wilmington Capital and PayPal Holdings

The main advantage of trading using opposite Wilmington Capital and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilmington Capital 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 Wilmington Capital Management and PayPal Holdings CDR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.