Correlation Between PayPal Holdings and Nationwide Small
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Nationwide Small 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 Nationwide Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Nationwide Small Cap, you can compare the effects of market volatilities on PayPal Holdings and Nationwide Small 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 Nationwide Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Nationwide Small.
Diversification Opportunities for PayPal Holdings and Nationwide Small
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PayPal and Nationwide is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Nationwide Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Small Cap 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 Nationwide Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Small Cap has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Nationwide Small go up and down completely randomly.
Pair Corralation between PayPal Holdings and Nationwide Small
If you would invest 7,925 in PayPal Holdings on September 6, 2024 and sell it today you would earn a total of 1,008 from holding PayPal Holdings or generate 12.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 0.0% |
Values | Daily Returns |
PayPal Holdings vs. Nationwide Small Cap
Performance |
Timeline |
PayPal Holdings |
Nationwide Small Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
PayPal Holdings and Nationwide Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PayPal Holdings and Nationwide Small
The main advantage of trading using opposite PayPal Holdings and Nationwide Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Nationwide Small 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 Nationwide Small will offset losses from the drop in Nationwide Small's long position.PayPal Holdings vs. SoFi Technologies | PayPal Holdings vs. Visa Class A | PayPal Holdings vs. Mastercard | PayPal Holdings vs. Capital One Financial |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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