Correlation Between Regional Management and 360 Finance
Can any of the company-specific risk be diversified away by investing in both Regional Management and 360 Finance 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 Regional Management and 360 Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Management Corp and 360 Finance, you can compare the effects of market volatilities on Regional Management and 360 Finance 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 Regional Management with a short position of 360 Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Management and 360 Finance.
Diversification Opportunities for Regional Management and 360 Finance
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Regional and 360 is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and 360 Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 360 Finance and Regional Management 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 Regional Management Corp are associated (or correlated) with 360 Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 360 Finance has no effect on the direction of Regional Management i.e., Regional Management and 360 Finance go up and down completely randomly.
Pair Corralation between Regional Management and 360 Finance
Allowing for the 90-day total investment horizon Regional Management is expected to generate 3.93 times less return on investment than 360 Finance. But when comparing it to its historical volatility, Regional Management Corp is 1.17 times less risky than 360 Finance. It trades about 0.02 of its potential returns per unit of risk. 360 Finance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,535 in 360 Finance on August 24, 2024 and sell it today you would earn a total of 1,918 from holding 360 Finance or generate 124.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Management Corp vs. 360 Finance
Performance |
| Timeline |
| Regional Management Corp |
| 360 Finance |
Regional Management and 360 Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Management and 360 Finance
The main advantage of trading using opposite Regional Management and 360 Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Management position performs unexpectedly, 360 Finance 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 360 Finance will offset losses from the drop in 360 Finance's long position.| Regional Management vs. SLM Corp Pb | Regional Management vs. FirstCash | Regional Management vs. Navient Corp | Regional Management vs. Orix Corp Ads |
| 360 Finance vs. CF Industries Holdings | 360 Finance vs. Natural Alternatives International | 360 Finance vs. Albertsons Companies | 360 Finance vs. Arq Inc |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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