Correlation Between PayPal Holdings and Tree Island

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

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

Diversification Opportunities for PayPal Holdings and Tree Island

-0.37

Correlation Coefficient

PayPal Holdings  Tree Island

Very good diversification

The 3 months correlation between PayPal and Tree is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding PayPal Holdings CDR and Tree Island Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tree Island Steel 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 CDR are associated (or correlated) with Tree Island. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tree Island Steel has no effect on the direction of PayPal Holdings i.e., PayPal Holdings and Tree Island go up and down completely randomly.

Pair Corralation between PayPal Holdings and Tree Island

Assuming the 90 days trading horizon PayPal Holdings CDR is expected to under-perform the Tree Island. In addition to that, PayPal Holdings is 1.2 times more volatile than Tree Island Steel. It trades about -0.07 of its total potential returns per unit of risk. Tree Island Steel is currently generating about 0.07 per unit of volatility. If you would invest  248.00  in Tree Island Steel on July 5, 2025 and sell it today you would earn a total of  16.00  from holding Tree Island Steel or generate 6.45% return on investment over 90 days.

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

PayPal Holdings CDR  vs.  Tree Island Steel

PayPal Holdings CDR

Risk-Adjusted Performance

Weakest

Over the last 90 days PayPal Holdings CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Tree Island Steel

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Tree Island Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating essential indicators, Tree Island may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with PayPal Holdings and Tree Island

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

The idea behind PayPal Holdings CDR and Tree Island Steel 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.