Correlation Between Yirendai and FirstCash
Can any of the company-specific risk be diversified away by investing in both Yirendai and FirstCash 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 Yirendai and FirstCash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yirendai and FirstCash, you can compare the effects of market volatilities on Yirendai and FirstCash 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 Yirendai with a short position of FirstCash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yirendai and FirstCash.
Diversification Opportunities for Yirendai and FirstCash
Poor diversification
The 3 months correlation between Yirendai and FirstCash is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash and Yirendai 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 Yirendai are associated (or correlated) with FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Yirendai i.e., Yirendai and FirstCash go up and down completely randomly.
Pair Corralation between Yirendai and FirstCash
Considering the 90-day investment horizon Yirendai is expected to generate 2.7 times more return on investment than FirstCash. However, Yirendai is 2.7 times more volatile than FirstCash. It trades about 0.09 of its potential returns per unit of risk. FirstCash is currently generating about 0.03 per unit of risk. If you would invest 225.00 in Yirendai on November 28, 2024 and sell it today you would earn a total of 489.00 from holding Yirendai or generate 217.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yirendai vs. FirstCash
Performance |
| Timeline |
| Yirendai |
| FirstCash |
Yirendai and FirstCash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yirendai and FirstCash
The main advantage of trading using opposite Yirendai and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yirendai position performs unexpectedly, FirstCash 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 FirstCash will offset losses from the drop in FirstCash's long position.| Yirendai vs. Lexinfintech Holdings | Yirendai vs. FinVolution Group | Yirendai vs. 360 Finance | Yirendai vs. Navient Corp |
| FirstCash vs. World Acceptance | FirstCash vs. Enova International | FirstCash vs. Green Dot | FirstCash vs. Medallion Financial 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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