Correlation Between PayPal Holdings and Dune Acquisition
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Dune Acquisition 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 Dune Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Dune Acquisition Corp, you can compare the effects of market volatilities on PayPal Holdings and Dune Acquisition 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 Dune Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Dune Acquisition.
Diversification Opportunities for PayPal Holdings and Dune Acquisition
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Dune is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Dune Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dune Acquisition Corp 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 Dune Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dune Acquisition Corp has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Dune Acquisition go up and down completely randomly.
Pair Corralation between PayPal Holdings and Dune Acquisition
Given the investment horizon of 90 days PayPal Holdings is expected to generate 8.82 times more return on investment than Dune Acquisition. However, PayPal Holdings is 8.82 times more volatile than Dune Acquisition Corp. It trades about 0.04 of its potential returns per unit of risk. Dune Acquisition Corp is currently generating about 0.14 per unit of risk. If you would invest 6,755 in PayPal Holdings on September 18, 2024 and sell it today you would earn a total of 2,375 from holding PayPal Holdings or generate 35.16% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 28.69% |
Values | Daily Returns |
PayPal Holdings vs. Dune Acquisition Corp
Performance |
Timeline |
PayPal Holdings |
Dune Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
PayPal Holdings and Dune Acquisition Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PayPal Holdings and Dune Acquisition
The main advantage of trading using opposite PayPal Holdings and Dune Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Dune Acquisition 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 Dune Acquisition will offset losses from the drop in Dune Acquisition's long position.PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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