Correlation Between EZCORP and Open Lending
Can any of the company-specific risk be diversified away by investing in both EZCORP and Open Lending 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 EZCORP and Open Lending into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EZCORP Inc and Open Lending Corp, you can compare the effects of market volatilities on EZCORP and Open Lending 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 EZCORP with a short position of Open Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of EZCORP and Open Lending.
Diversification Opportunities for EZCORP and Open Lending
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between EZCORP and Open is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding EZCORP Inc and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp and EZCORP 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 EZCORP Inc are associated (or correlated) with Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of EZCORP i.e., EZCORP and Open Lending go up and down completely randomly.
Pair Corralation between EZCORP and Open Lending
Given the investment horizon of 90 days EZCORP is expected to generate 3.34 times less return on investment than Open Lending. But when comparing it to its historical volatility, EZCORP Inc is 3.94 times less risky than Open Lending. It trades about 0.19 of its potential returns per unit of risk. Open Lending Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 547.00 in Open Lending Corp on August 24, 2024 and sell it today you would earn a total of 76.00 from holding Open Lending Corp or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EZCORP Inc vs. Open Lending Corp
Performance |
| Timeline |
| EZCORP Inc |
| Open Lending Corp |
EZCORP and Open Lending Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EZCORP and Open Lending
The main advantage of trading using opposite EZCORP and Open Lending positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EZCORP position performs unexpectedly, Open Lending 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 Open Lending will offset losses from the drop in Open Lending's long position.The idea behind EZCORP Inc and Open Lending Corp 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.| Open Lending vs. EZCORP Inc | Open Lending vs. Orix Corp Ads | Open Lending vs. SLM Corp | Open Lending vs. Navient Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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