Correlation Between Lexinfintech Holdings and Elevate Credit

Can any of the company-specific risk be diversified away by investing in both Lexinfintech Holdings and Elevate Credit 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 Elevate Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lexinfintech Holdings and Elevate Credit, you can compare the effects of market volatilities on Lexinfintech Holdings and Elevate Credit 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 Elevate Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexinfintech Holdings and Elevate Credit.

Diversification Opportunities for Lexinfintech Holdings and Elevate Credit

0.06

Correlation Coefficient

Lexinfintech Holdings  Elevate Credit

Significant diversification

The 3 months correlation between Lexinfintech and Elevate is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and Elevate Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elevate Credit 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 Elevate Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elevate Credit has no effect on the direction of Lexinfintech Holdings i.e., Lexinfintech Holdings and Elevate Credit go up and down completely randomly.

Pair Corralation between Lexinfintech Holdings and Elevate Credit

If you would invest  187.00  in Elevate Credit on January 20, 2024 and sell it today you would earn a total of  0.00  from holding Elevate Credit or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.33%
Values	Daily Returns

Lexinfintech Holdings  vs.  Elevate Credit

Lexinfintech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lexinfintech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Lexinfintech Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Elevate Credit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevate Credit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Elevate Credit is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lexinfintech Holdings and Elevate Credit

The main advantage of trading using opposite Lexinfintech Holdings and Elevate Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexinfintech Holdings position performs unexpectedly, Elevate Credit 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 Elevate Credit will offset losses from the drop in Elevate Credit's long position.

The idea behind Lexinfintech Holdings and Elevate Credit 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..