Correlation Between Lexinfintech Holdings and FirstCash
Can any of the company-specific risk be diversified away by investing in both Lexinfintech Holdings 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 Lexinfintech Holdings and FirstCash into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lexinfintech Holdings and FirstCash, you can compare the effects of market volatilities on Lexinfintech Holdings 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 Lexinfintech Holdings with a short position of FirstCash. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexinfintech Holdings and FirstCash.
Diversification Opportunities for Lexinfintech Holdings and FirstCash
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lexinfintech and FirstCash is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash and Lexinfintech Holdings 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 Lexinfintech Holdings 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 Lexinfintech Holdings i.e., Lexinfintech Holdings and FirstCash go up and down completely randomly.
Pair Corralation between Lexinfintech Holdings and FirstCash
Allowing for the 90-day total investment horizon Lexinfintech Holdings is expected to under-perform the FirstCash. In addition to that, Lexinfintech Holdings is 2.68 times more volatile than FirstCash. It trades about -0.01 of its total potential returns per unit of risk. FirstCash is currently generating about 0.1 per unit of volatility. If you would invest 9,640 in FirstCash on January 19, 2024 and sell it today you would earn a total of 3,232 from holding FirstCash or generate 33.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lexinfintech Holdings vs. FirstCash
Performance |
| Timeline |
| Lexinfintech Holdings |
| FirstCash |
Lexinfintech Holdings and FirstCash Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lexinfintech Holdings and FirstCash
The main advantage of trading using opposite Lexinfintech Holdings and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexinfintech Holdings 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.| Lexinfintech Holdings vs. Mersana Therapeutics | Lexinfintech Holdings vs. Amtech Systems | Lexinfintech Holdings vs. First United |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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