Correlation Between Open Lending and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Open Lending and Dow Jones 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 Open Lending and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Open Lending Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Open Lending and Dow Jones 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 Open Lending with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Lending and Dow Jones.
Diversification Opportunities for Open Lending and Dow Jones
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Open and Dow is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Open Lending Corp and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Open Lending 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 Open Lending Corp are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Open Lending i.e., Open Lending and Dow Jones go up and down completely randomly.
Pair Corralation between Open Lending and Dow Jones
Given the investment horizon of 90 days Open Lending Corp is expected to generate 4.4 times more return on investment than Dow Jones. However, Open Lending is 4.4 times more volatile than Dow Jones Industrial. It trades about 0.17 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.27 per unit of risk. If you would invest 551.00 in Open Lending Corp on August 29, 2024 and sell it today you would earn a total of 85.00 from holding Open Lending Corp or generate 15.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Open Lending Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Open Lending and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Open Lending Corp
Pair trading matchups for Open Lending
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Open Lending and Dow Jones
The main advantage of trading using opposite Open Lending and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Lending position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Open Lending vs. EZCORP Inc | Open Lending vs. Orix Corp Ads | Open Lending vs. SLM Corp | Open Lending vs. Navient Corp |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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