Correlation Between Open Lending and Enova International

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Can any of the company-specific risk be diversified away by investing in both Open Lending and Enova International 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 Enova International 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 Enova International, you can compare the effects of market volatilities on Open Lending and Enova International 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 Enova International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Open Lending and Enova International.

Diversification Opportunities for Open Lending and Enova International

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Open and Enova is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Open Lending Corp and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International 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 Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of Open Lending i.e., Open Lending and Enova International go up and down completely randomly.

Pair Corralation between Open Lending and Enova International

Given the investment horizon of 90 days Open Lending Corp is expected to under-perform the Enova International. In addition to that, Open Lending is 1.54 times more volatile than Enova International. It trades about -0.02 of its total potential returns per unit of risk. Enova International is currently generating about 0.15 per unit of volatility. If you would invest  5,536  in Enova International on August 25, 2024 and sell it today you would earn a total of  4,938  from holding Enova International or generate 89.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Open Lending Corp  vs.  Enova International

 Performance 
       Timeline  
Open Lending Corp 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Lending displayed solid returns over the last few months and may actually be approaching a breakup point.
Enova International 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Open Lending and Enova International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Open Lending and Enova International

The main advantage of trading using opposite Open Lending and Enova International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Lending position performs unexpectedly, Enova International 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 Enova International will offset losses from the drop in Enova International's long position.
The idea behind Open Lending Corp and Enova International 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.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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