Correlation Between Alliance Resource and OppFi

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

By analyzing existing cross correlation between Alliance Resource Partners and OppFi Inc, you can compare the effects of market volatilities on Alliance Resource and OppFi 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 Alliance Resource with a short position of OppFi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Resource and OppFi.

Diversification Opportunities for Alliance Resource and OppFi

0.57

Correlation Coefficient

Alliance Resource  OppFi

Very weak diversification

The 3 months correlation between Alliance and OppFi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and OppFi Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OppFi Inc and Alliance Resource 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 Alliance Resource Partners are associated (or correlated) with OppFi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OppFi Inc has no effect on the direction of Alliance Resource i.e., Alliance Resource and OppFi go up and down completely randomly.

Pair Corralation between Alliance Resource and OppFi

Given the investment horizon of 90 days Alliance Resource Partners is expected to generate 0.32 times more return on investment than OppFi. However, Alliance Resource Partners is 3.08 times less risky than OppFi. It trades about -0.2 of its potential returns per unit of risk. OppFi Inc is currently generating about -0.33 per unit of risk. If you would invest  2,798  in Alliance Resource Partners on December 2, 2024 and sell it today you would lose (174.00) from holding Alliance Resource Partners or give up 6.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Alliance Resource Partners  vs.  OppFi Inc

Alliance Resource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Resource Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Alliance Resource is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

OppFi Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alliance Resource and OppFi

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

The idea behind Alliance Resource Partners and OppFi 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.