Correlation Between FirstCash and Bread Financial
Can any of the company-specific risk be diversified away by investing in both FirstCash and Bread Financial 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 FirstCash and Bread Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and Bread Financial Holdings, you can compare the effects of market volatilities on FirstCash and Bread Financial 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 FirstCash with a short position of Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Bread Financial.
Diversification Opportunities for FirstCash and Bread Financial
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between FirstCash and Bread is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings and FirstCash 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 FirstCash are associated (or correlated) with Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of FirstCash i.e., FirstCash and Bread Financial go up and down completely randomly.
Pair Corralation between FirstCash and Bread Financial
Given the investment horizon of 90 days FirstCash is expected to under-perform the Bread Financial. But the stock apears to be less risky and, when comparing its historical volatility, FirstCash is 2.18 times less risky than Bread Financial. The stock trades about -0.09 of its potential returns per unit of risk. The Bread Financial Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 5,052 in Bread Financial Holdings on August 23, 2024 and sell it today you would earn a total of 666.00 from holding Bread Financial Holdings or generate 13.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstCash vs. Bread Financial Holdings
Performance |
| Timeline |
| FirstCash |
| Bread Financial Holdings |
FirstCash and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstCash and Bread Financial
The main advantage of trading using opposite FirstCash and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial Corp |
| Bread Financial vs. SLM Corp | Bread Financial vs. Orix Corp Ads | Bread Financial vs. FirstCash | Bread Financial vs. Medallion Financial 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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