Correlation Between PayPal Holdings and Growlife

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Can any of the company-specific risk be diversified away by investing in both PayPal Holdings and Growlife 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 Growlife into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PayPal Holdings and Growlife, you can compare the effects of market volatilities on PayPal Holdings and Growlife 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 Growlife. Check out your portfolio center. Please also check ongoing floating volatility patterns of PayPal Holdings and Growlife.

Diversification Opportunities for PayPal Holdings and Growlife

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between PayPal and Growlife is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Growlife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growlife 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 Growlife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growlife has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Growlife go up and down completely randomly.

Pair Corralation between PayPal Holdings and Growlife

Given the investment horizon of 90 days PayPal Holdings is expected to generate 35.11 times less return on investment than Growlife. But when comparing it to its historical volatility, PayPal Holdings is 33.09 times less risky than Growlife. It trades about 0.1 of its potential returns per unit of risk. Growlife is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Growlife on September 20, 2024 and sell it today you would lose (0.03) from holding Growlife or give up 75.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

PayPal Holdings  vs.  Growlife

 Performance 
       Timeline  
PayPal Holdings 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Growlife 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Growlife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Growlife unveiled solid returns over the last few months and may actually be approaching a breakup point.

PayPal Holdings and Growlife Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PayPal Holdings and Growlife

The main advantage of trading using opposite PayPal Holdings and Growlife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PayPal Holdings position performs unexpectedly, Growlife 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 Growlife will offset losses from the drop in Growlife's long position.
The idea behind PayPal Holdings and Growlife 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.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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