Correlation Between OppFi and First Pacific
Can any of the company-specific risk be diversified away by investing in both OppFi and First Pacific 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 First Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OppFi Inc and First Pacific, you can compare the effects of market volatilities on OppFi and First Pacific 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 First Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of OppFi and First Pacific.
Diversification Opportunities for OppFi and First Pacific
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OppFi and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and First Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Pacific 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 First Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Pacific has no effect on the direction of OppFi i.e., OppFi and First Pacific go up and down completely randomly.
Pair Corralation between OppFi and First Pacific
Given the investment horizon of 90 days OppFi is expected to generate 1.58 times less return on investment than First Pacific. But when comparing it to its historical volatility, OppFi Inc is 2.46 times less risky than First Pacific. It trades about 0.1 of its potential returns per unit of risk. First Pacific is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 36.00 in First Pacific on October 21, 2024 and sell it today you would earn a total of 18.00 from holding First Pacific or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.36% |
| Values | Daily Returns |
OppFi Inc vs. First Pacific
Performance |
| Timeline |
| OppFi Inc |
| First Pacific |
OppFi and First Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OppFi and First Pacific
The main advantage of trading using opposite OppFi and First Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OppFi position performs unexpectedly, First Pacific 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 First Pacific will offset losses from the drop in First Pacific's long position.The idea behind OppFi Inc and First Pacific 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.| First Pacific vs. BRF SA ADR | First Pacific vs. Flowers Foods | First Pacific vs. Premier Foods Plc | First Pacific vs. Torque Lifestyle Brands |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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