Correlation Between FirstCash and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both FirstCash and Lexinfintech Holdings 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 Lexinfintech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FirstCash and Lexinfintech Holdings, you can compare the effects of market volatilities on FirstCash and Lexinfintech Holdings 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 Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Lexinfintech Holdings.
Diversification Opportunities for FirstCash and Lexinfintech Holdings
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FirstCash and Lexinfintech is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of FirstCash i.e., FirstCash and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between FirstCash and Lexinfintech Holdings
Given the investment horizon of 90 days FirstCash is expected to generate 0.59 times more return on investment than Lexinfintech Holdings. However, FirstCash is 1.68 times less risky than Lexinfintech Holdings. It trades about 0.31 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about -0.1 per unit of risk. If you would invest 12,281 in FirstCash on January 25, 2024 and sell it today you would earn a total of 969.00 from holding FirstCash or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FirstCash vs. Lexinfintech Holdings
Performance |
| Timeline |
| FirstCash |
| Lexinfintech Holdings |
FirstCash and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FirstCash and Lexinfintech Holdings
The main advantage of trading using opposite FirstCash and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FirstCash position performs unexpectedly, Lexinfintech Holdings 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| FirstCash vs. Visa Class A | FirstCash vs. Mastercard | FirstCash vs. Oshidori International Holdings | FirstCash vs. US70082LAB36 |
| Lexinfintech Holdings vs. Visa Class A | Lexinfintech Holdings vs. Mastercard | Lexinfintech Holdings vs. Oshidori International Holdings | Lexinfintech Holdings 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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