Correlation Between PayPal Holdings and Harbor Capital

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

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

Diversification Opportunities for PayPal Holdings and Harbor Capital

0.92

Correlation Coefficient

PayPal Holdings  Harbor Capital

Almost no diversification

The 3 months correlation between PayPal and Harbor is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Harbor Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harbor Capital Appre 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 Harbor Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harbor Capital Appre has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Harbor Capital go up and down completely randomly.

Pair Corralation between PayPal Holdings and Harbor Capital

Given the investment horizon of 90 days PayPal Holdings is expected to generate 1.79 times more return on investment than Harbor Capital. However, PayPal Holdings is 1.79 times more volatile than Harbor Capital Appreciation. It trades about 0.15 of its potential returns per unit of risk. Harbor Capital Appreciation is currently generating about 0.2 per unit of risk. 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

PayPal Holdings  vs.  Harbor Capital Appreciation

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.

Harbor Capital Appre

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Harbor Capital Appreciation are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Harbor Capital showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PayPal Holdings and Harbor Capital

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

The idea behind PayPal Holdings and Harbor Capital Appreciation 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.