Judging by the date, seems this arrives a little too late, but anyways…
I assume you are making a PaperCharacter blueprint from you sprite. The box you see in the blueprint is from PaperCharacter and is a bounding box all PaperCharacters have that is independent from the Sprite you put in that PaperCharacter.
The collision shape is for Sprites (and not for PaperCharacters BPs) and is a different box. You can move it and align it with the image if you fancy so. I think this collision will only work if you put your sprite directly on the scene instead of doing a Blueprint from it. If you make a blueprint, you can set the sprite collision as non blocking and use the PaperCharacter box you already have positioned for that purpose.