Correlation Between FirstCash and Nerdwallet
Can any of the company-specific risk be diversified away by investing in both FirstCash and Nerdwallet 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 Nerdwallet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and Nerdwallet, you can compare the effects of market volatilities on FirstCash and Nerdwallet 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 Nerdwallet. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Nerdwallet.
Diversification Opportunities for FirstCash and Nerdwallet
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FirstCash and Nerdwallet is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Nerdwallet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nerdwallet 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 Nerdwallet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nerdwallet has no effect on the direction of FirstCash i.e., FirstCash and Nerdwallet go up and down completely randomly.
Pair Corralation between FirstCash and Nerdwallet
Given the investment horizon of 90 days FirstCash is expected to generate 8.05 times less return on investment than Nerdwallet. But when comparing it to its historical volatility, FirstCash is 4.87 times less risky than Nerdwallet. It trades about 0.08 of its potential returns per unit of risk. Nerdwallet is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,158 in Nerdwallet on August 29, 2024 and sell it today you would earn a total of 229.00 from holding Nerdwallet or generate 19.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstCash vs. Nerdwallet
Performance |
| Timeline |
| FirstCash |
| Nerdwallet |
FirstCash and Nerdwallet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstCash and Nerdwallet
The main advantage of trading using opposite FirstCash and Nerdwallet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash position performs unexpectedly, Nerdwallet 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 Nerdwallet will offset losses from the drop in Nerdwallet's long position.| FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial Corp |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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