Correlation Between PayPal Holdings and Genesis Technology

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

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

Diversification Opportunities for PayPal Holdings and Genesis Technology

0.57

Correlation Coefficient

PayPal Holdings  Genesis Technology

Very weak diversification

The 3 months correlation between PayPal and Genesis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Genesis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Technology 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 Genesis Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Technology has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Genesis Technology go up and down completely randomly.

Pair Corralation between PayPal Holdings and Genesis Technology

Given the investment horizon of 90 days PayPal Holdings is expected to under-perform the Genesis Technology. In addition to that, PayPal Holdings is 1.43 times more volatile than Genesis Technology. It trades about -0.05 of its total potential returns per unit of risk. Genesis Technology is currently generating about 0.41 per unit of volatility. If you would invest  7,620  in Genesis Technology on January 25, 2024 and sell it today you would earn a total of  630.00  from holding Genesis Technology or generate 8.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

PayPal Holdings  vs.  Genesis Technology

PayPal Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PayPal Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, PayPal Holdings may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Genesis Technology

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Technology are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Genesis Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PayPal Holdings and Genesis Technology

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

The idea behind PayPal Holdings and Genesis Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.