Correlation Between PayPal Holdings and Aena SME

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

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

Diversification Opportunities for PayPal Holdings and Aena SME

0.29

Correlation Coefficient

PayPal Holdings  Aena SME

Modest diversification

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

Pair Corralation between PayPal Holdings and Aena SME

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.18 times more return on investment than Aena SME. However, PayPal Holdings is 1.18 times more volatile than Aena SME SA. It trades about 0.29 of its potential returns per unit of risk. Aena SME SA is currently generating about -0.14 per unit of risk. If you would invest  7,822  in PayPal Holdings on August 31, 2024 and sell it today you would earn a total of  835.00  from holding PayPal Holdings or generate 10.68% return on investment over 90 days.

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

PayPal Holdings  vs.  Aena SME SA

PayPal Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 13 (%) 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.

Aena SME SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Aena SME may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with PayPal Holdings and Aena SME

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

The idea behind PayPal Holdings and Aena SME SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.