Correlation Between PayPal Holdings and Herborium

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

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

Diversification Opportunities for PayPal Holdings and Herborium

0.14

Correlation Coefficient

PayPal Holdings  Herborium

Average diversification

The 3 months correlation between PayPal and Herborium is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Herborium Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herborium Group 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 Herborium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herborium Group has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Herborium go up and down completely randomly.

Pair Corralation between PayPal Holdings and Herborium

If you would invest  7,203  in PayPal Holdings on September 5, 2024 and sell it today you would earn a total of  1,311  from holding PayPal Holdings or generate 18.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

PayPal Holdings  vs.  Herborium Group

PayPal Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 11 (%) 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.

Herborium Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Herborium Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Herborium is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PayPal Holdings and Herborium

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

The idea behind PayPal Holdings and Herborium Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.