Correlation Between PayPal Holdings and Upstart HoldingsInc

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

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

Diversification Opportunities for PayPal Holdings and Upstart HoldingsInc

-0.09

Correlation Coefficient

PayPal Holdings  Upstart HoldingsInc

Good diversification

The 3 months correlation between PayPal and Upstart is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings and Upstart HoldingsInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upstart HoldingsInc 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 Upstart HoldingsInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upstart HoldingsInc has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Upstart HoldingsInc go up and down completely randomly.

Pair Corralation between PayPal Holdings and Upstart HoldingsInc

Given the investment horizon of 90 days PayPal Holdings is expected to generate 0.41 times more return on investment than Upstart HoldingsInc. However, PayPal Holdings is 2.46 times less risky than Upstart HoldingsInc. It trades about -0.15 of its potential returns per unit of risk. Upstart HoldingsInc is currently generating about -0.22 per unit of risk. If you would invest  6,505  in PayPal Holdings on January 20, 2024 and sell it today you would lose (295.00) from holding PayPal Holdings or give up 4.53% of portfolio value over 90 days.

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

PayPal Holdings  vs.  Upstart HoldingsInc

PayPal Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PayPal Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, PayPal Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Upstart HoldingsInc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Upstart HoldingsInc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PayPal Holdings and Upstart HoldingsInc

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

The idea behind PayPal Holdings and Upstart HoldingsInc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.