Correlation Between PayPal Holdings and Homeland Resources
Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Homeland Resources 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 Homeland Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Homeland Resources, you can compare the effects of market volatilities on PayPal Holdings and Homeland Resources 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 Homeland Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Homeland Resources.
Diversification Opportunities for PayPal Holdings and Homeland Resources
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PayPal and Homeland is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Homeland Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeland Resources 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 Homeland Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeland Resources has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Homeland Resources go up and down completely randomly.
Pair Corralation between PayPal Holdings and Homeland Resources
Given the investment horizon of 90 days PayPal Holdings is expected to generate 16.02 times less return on investment than Homeland Resources. But when comparing it to its historical volatility, PayPal Holdings is 14.14 times less risky than Homeland Resources. It trades about 0.08 of its potential returns per unit of risk. Homeland Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.08 in Homeland Resources on September 12, 2024 and sell it today you would lose (0.06) from holding Homeland Resources or give up 75.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 96.37% |
Values | Daily Returns |
PayPal Holdings vs. Homeland Resources
Performance |
Timeline |
PayPal Holdings |
Homeland Resources |
PayPal Holdings and Homeland Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PayPal Holdings and Homeland Resources
The main advantage of trading using opposite PayPal Holdings and Homeland Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Homeland Resources 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 Homeland Resources will offset losses from the drop in Homeland Resources' long position.PayPal Holdings vs. American Express | PayPal Holdings vs. Capital One Financial | PayPal Holdings vs. Upstart Holdings | PayPal Holdings vs. Ally 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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