Correlation Between OppFi and BASE
Can any of the company-specific risk be diversified away by investing in both OppFi and BASE 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 OppFi and BASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OppFi Inc and BASE Inc, you can compare the effects of market volatilities on OppFi and BASE 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 OppFi with a short position of BASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of OppFi and BASE.
Diversification Opportunities for OppFi and BASE
Poor diversification
The 3 months correlation between OppFi and BASE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc and OppFi 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 OppFi Inc are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of OppFi i.e., OppFi and BASE go up and down completely randomly.
Pair Corralation between OppFi and BASE
Given the investment horizon of 90 days OppFi Inc is expected to generate 5.24 times more return on investment than BASE. However, OppFi is 5.24 times more volatile than BASE Inc. It trades about 0.35 of its potential returns per unit of risk. BASE Inc is currently generating about 0.12 per unit of risk. If you would invest 722.00 in OppFi Inc on October 20, 2024 and sell it today you would earn a total of 380.00 from holding OppFi Inc or generate 52.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
OppFi Inc vs. BASE Inc
Performance |
| Timeline |
| OppFi Inc |
| BASE Inc |
OppFi and BASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OppFi and BASE
The main advantage of trading using opposite OppFi and BASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OppFi position performs unexpectedly, BASE 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 BASE will offset losses from the drop in BASE's long position.The idea behind OppFi Inc and BASE Inc 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.| BASE vs. CurrentC Power | BASE vs. Agent Information Software | BASE vs. Auddia Inc | BASE vs. Maxwell Resource |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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