Correlation Between Oportun Financial and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Oportun Financial 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 Oportun Financial and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oportun Financial Corp and Dow Jones Industrial, you can compare the effects of market volatilities on Oportun Financial 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 Oportun Financial with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oportun Financial and Dow Jones.
Diversification Opportunities for Oportun Financial and Dow Jones
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oportun and Dow is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Oportun Financial 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 Oportun Financial 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 Oportun Financial 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 Oportun Financial i.e., Oportun Financial and Dow Jones go up and down completely randomly.
Pair Corralation between Oportun Financial and Dow Jones
Given the investment horizon of 90 days Oportun Financial Corp is expected to generate 4.38 times more return on investment than Dow Jones. However, Oportun Financial is 4.38 times more volatile than Dow Jones Industrial. It trades about 0.3 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of risk. If you would invest 268.00 in Oportun Financial Corp on August 28, 2024 and sell it today you would earn a total of 78.00 from holding Oportun Financial Corp or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oportun Financial Corp vs. Dow Jones Industrial
Performance |
| Timeline |
Oportun Financial and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Oportun Financial Corp
Pair trading matchups for Oportun Financial
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Oportun Financial and Dow Jones
The main advantage of trading using opposite Oportun Financial and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oportun Financial 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.| Oportun Financial vs. SLM Corp | Oportun Financial vs. Orix Corp Ads | Oportun Financial vs. FirstCash | Oportun Financial vs. Medallion Financial Corp |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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