Correlation Between PayPal Holdings and Premier Information

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

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

Diversification Opportunities for PayPal Holdings and Premier Information

-0.63

Correlation Coefficient

PayPal Holdings  Premier Information

Excellent diversification

The 3 months correlation between PayPal and Premier is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Premier information Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier information 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 Premier Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier information has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Premier Information go up and down completely randomly.

Pair Corralation between PayPal Holdings and Premier Information

Given the investment horizon of 90 days PayPal Holdings is expected to generate 11.9 times less return on investment than Premier Information. But when comparing it to its historical volatility, PayPal Holdings is 22.95 times less risky than Premier Information. It trades about 0.21 of its potential returns per unit of risk. Premier information Management is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Premier information Management on September 12, 2024 and sell it today you would lose (0.21) from holding Premier information Management or give up 70.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PayPal Holdings  vs.  Premier information Management

PayPal Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, PayPal Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Premier information

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Premier information Management are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, Premier Information reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PayPal Holdings and Premier Information

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

The idea behind PayPal Holdings and Premier information Management 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.