Correlation Between CPI Card and Yirendai
Can any of the company-specific risk be diversified away by investing in both CPI Card and Yirendai 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 CPI Card and Yirendai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CPI Card Group and Yirendai, you can compare the effects of market volatilities on CPI Card and Yirendai 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 CPI Card with a short position of Yirendai. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPI Card and Yirendai.
Diversification Opportunities for CPI Card and Yirendai
Excellent diversification
The 3 months correlation between CPI and Yirendai is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CPI Card Group and Yirendai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yirendai and CPI Card 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 CPI Card Group are associated (or correlated) with Yirendai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yirendai has no effect on the direction of CPI Card i.e., CPI Card and Yirendai go up and down completely randomly.
Pair Corralation between CPI Card and Yirendai
Given the investment horizon of 90 days CPI Card Group is expected to generate 0.71 times more return on investment than Yirendai. However, CPI Card Group is 1.41 times less risky than Yirendai. It trades about 0.33 of its potential returns per unit of risk. Yirendai is currently generating about -0.19 per unit of risk. If you would invest 2,380 in CPI Card Group on August 28, 2024 and sell it today you would earn a total of 644.00 from holding CPI Card Group or generate 27.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CPI Card Group vs. Yirendai
Performance |
| Timeline |
| CPI Card Group |
| Yirendai |
CPI Card and Yirendai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CPI Card and Yirendai
The main advantage of trading using opposite CPI Card and Yirendai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPI Card position performs unexpectedly, Yirendai 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 Yirendai will offset losses from the drop in Yirendai's long position.| CPI Card vs. FirstCash | CPI Card vs. Runway Growth Finance | CPI Card vs. Credit Acceptance | CPI Card vs. SLM Corp |
| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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