Correlation Between FirstCash and EZCORP
Can any of the company-specific risk be diversified away by investing in both FirstCash 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 FirstCash and EZCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and EZCORP Inc, you can compare the effects of market volatilities on FirstCash 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 FirstCash with a short position of EZCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and EZCORP.
Diversification Opportunities for FirstCash and EZCORP
Poor diversification
The 3 months correlation between FirstCash and EZCORP is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and FirstCash 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 FirstCash 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 FirstCash i.e., FirstCash and EZCORP go up and down completely randomly.
Pair Corralation between FirstCash and EZCORP
Given the investment horizon of 90 days FirstCash is expected to generate 0.83 times more return on investment than EZCORP. However, FirstCash is 1.2 times less risky than EZCORP. It trades about 0.09 of its potential returns per unit of risk. EZCORP Inc is currently generating about 0.05 per unit of risk. If you would invest 8,943 in FirstCash on January 24, 2024 and sell it today you would earn a total of 4,116 from holding FirstCash or generate 46.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstCash vs. EZCORP Inc
Performance |
| Timeline |
| FirstCash |
| EZCORP Inc |
FirstCash and EZCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstCash and EZCORP
The main advantage of trading using opposite FirstCash and EZCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash 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.| FirstCash vs. Visa Class A | FirstCash vs. Mastercard | FirstCash vs. Oshidori International Holdings | FirstCash vs. US70082LAB36 |
| EZCORP vs. Visa Class A | EZCORP vs. Mastercard | EZCORP vs. Oshidori International Holdings | EZCORP vs. US70082LAB36 |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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