Correlation Between Affirm Holdings and Dlocal
Can any of the company-specific risk be diversified away by investing in both Affirm Holdings and Dlocal 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 Affirm Holdings and Dlocal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affirm Holdings and Dlocal, you can compare the effects of market volatilities on Affirm Holdings and Dlocal 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 Affirm Holdings with a short position of Dlocal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affirm Holdings and Dlocal.
Diversification Opportunities for Affirm Holdings and Dlocal
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Affirm and Dlocal is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Affirm Holdings and Dlocal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dlocal and Affirm 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 Affirm Holdings are associated (or correlated) with Dlocal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dlocal has no effect on the direction of Affirm Holdings i.e., Affirm Holdings and Dlocal go up and down completely randomly.
Pair Corralation between Affirm Holdings and Dlocal
Given the investment horizon of 90 days Affirm Holdings is expected to under-perform the Dlocal. In addition to that, Affirm Holdings is 1.71 times more volatile than Dlocal. It trades about -0.2 of its total potential returns per unit of risk. Dlocal is currently generating about 0.03 per unit of volatility. If you would invest 1,160 in Dlocal on October 23, 2024 and sell it today you would earn a total of 8.50 from holding Dlocal or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affirm Holdings vs. Dlocal
Performance |
| Timeline |
| Affirm Holdings |
| Dlocal |
Affirm Holdings and Dlocal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affirm Holdings and Dlocal
The main advantage of trading using opposite Affirm Holdings and Dlocal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affirm Holdings position performs unexpectedly, Dlocal 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 Dlocal will offset losses from the drop in Dlocal's long position.| Affirm Holdings vs. Upstart Holdings | Affirm Holdings vs. SoFi Technologies | Affirm Holdings vs. Roblox Corp | Affirm Holdings vs. Robinhood Markets |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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