Correlation Between Yirendai and EZCORP

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Can any of the company-specific risk be diversified away by investing in both Yirendai and EZCORP 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 EZCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Yirendai and EZCORP Inc, you can compare the effects of market volatilities on Yirendai and EZCORP 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 EZCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yirendai and EZCORP.

Diversification Opportunities for Yirendai and EZCORP

-0.21
  Correlation Coefficient

Very good diversification

The 3 months correlation between Yirendai and EZCORP is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Yirendai and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc 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 EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of Yirendai i.e., Yirendai and EZCORP go up and down completely randomly.

Pair Corralation between Yirendai and EZCORP

Considering the 90-day investment horizon Yirendai is expected to under-perform the EZCORP. In addition to that, Yirendai is 2.31 times more volatile than EZCORP Inc. It trades about -0.09 of its total potential returns per unit of risk. EZCORP Inc is currently generating about -0.16 per unit of volatility. If you would invest  1,103  in EZCORP Inc on March 2, 2024 and sell it today you would lose (54.00) from holding EZCORP Inc or give up 4.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Yirendai  vs.  EZCORP Inc

 Performance 
       Timeline  
Yirendai 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Yirendai has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
EZCORP Inc 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, EZCORP is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yirendai and EZCORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Yirendai and EZCORP

The main advantage of trading using opposite Yirendai and EZCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yirendai position performs unexpectedly, EZCORP 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 EZCORP will offset losses from the drop in EZCORP's long position.
The idea behind Yirendai and EZCORP Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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