Correlation Between OppFi and Hess
Can any of the company-specific risk be diversified away by investing in both OppFi and Hess 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 Hess into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OppFi Inc and Hess Corporation, you can compare the effects of market volatilities on OppFi and Hess 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 Hess. Check out your portfolio center. Please also check ongoing floating volatility patterns of OppFi and Hess.
Diversification Opportunities for OppFi and Hess
Very weak diversification
The 3 months correlation between OppFi and Hess is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and Hess Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hess 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 Hess. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hess has no effect on the direction of OppFi i.e., OppFi and Hess go up and down completely randomly.
Pair Corralation between OppFi and Hess
Given the investment horizon of 90 days OppFi Inc is expected to generate 8.89 times more return on investment than Hess. However, OppFi is 8.89 times more volatile than Hess Corporation. It trades about 0.38 of its potential returns per unit of risk. Hess Corporation is currently generating about 1.1 per unit of risk. If you would invest 716.00 in OppFi Inc on October 23, 2024 and sell it today you would earn a total of 386.00 from holding OppFi Inc or generate 53.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OppFi Inc vs. Hess Corp.
Performance |
| Timeline |
| OppFi Inc |
| Hess |
OppFi and Hess Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OppFi and Hess
The main advantage of trading using opposite OppFi and Hess positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OppFi position performs unexpectedly, Hess 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 Hess will offset losses from the drop in Hess' long position.The idea behind OppFi Inc and Hess Corporation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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