Correlation Between Pitney Bowes and PayPal Holdings
Can any of the company-specific risk be diversified away by investing in both Pitney Bowes and PayPal Holdings 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 Pitney Bowes and PayPal Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pitney Bowes and PayPal Holdings, you can compare the effects of market volatilities on Pitney Bowes and PayPal Holdings 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 Pitney Bowes with a short position of PayPal Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pitney Bowes and PayPal Holdings.
Diversification Opportunities for Pitney Bowes and PayPal Holdings
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Pitney and PayPal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pitney Bowes and PayPal Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PayPal Holdings and Pitney Bowes 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 Pitney Bowes are associated (or correlated) with PayPal Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PayPal Holdings has no effect on the direction of Pitney Bowes i.e., Pitney Bowes and PayPal Holdings go up and down completely randomly.
Pair Corralation between Pitney Bowes and PayPal Holdings
Considering the 90-day investment horizon Pitney Bowes is expected to generate 1.47 times more return on investment than PayPal Holdings. However, Pitney Bowes is 1.47 times more volatile than PayPal Holdings. It trades about 0.04 of its potential returns per unit of risk. PayPal Holdings is currently generating about -0.01 per unit of risk. If you would invest 362.00 in Pitney Bowes on December 29, 2023 and sell it today you would earn a total of 76.00 from holding Pitney Bowes or generate 20.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.6% |
Values | Daily Returns |
Pitney Bowes vs. PayPal Holdings
Performance |
Timeline |
Pitney Bowes |
PayPal Holdings |
Pitney Bowes and PayPal Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pitney Bowes and PayPal Holdings
The main advantage of trading using opposite Pitney Bowes and PayPal Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pitney Bowes position performs unexpectedly, PayPal Holdings 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 PayPal Holdings will offset losses from the drop in PayPal Holdings' long position.Pitney Bowes vs. Broadridge Financial Solutions | Pitney Bowes vs. BrightView Holdings | Pitney Bowes vs. First Advantage Corp | Pitney Bowes vs. Franklin Covey |
PayPal Holdings vs. Diamond Hill Investment | PayPal Holdings vs. Nocturne Acquisition Corp | PayPal Holdings vs. Mountain I Acquisition | PayPal Holdings vs. Mountain Crest Acquisition |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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