Correlation Between CorVel Corp and FirstCash

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

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

Diversification Opportunities for CorVel Corp and FirstCash

-0.06

Correlation Coefficient

CorVel Corp  FirstCash

Good diversification

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

Pair Corralation between CorVel Corp and FirstCash

Given the investment horizon of 90 days CorVel Corp is expected to generate 21.67 times less return on investment than FirstCash. In addition to that, CorVel Corp is 1.82 times more volatile than FirstCash. It trades about 0.01 of its total potential returns per unit of risk. FirstCash is currently generating about 0.21 per unit of volatility. If you would invest  10,262  in FirstCash on December 29, 2024 and sell it today you would earn a total of  1,753  from holding FirstCash or generate 17.08% return on investment over 90 days.

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

CorVel Corp  vs.  FirstCash

CorVel Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CorVel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, CorVel Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FirstCash

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, FirstCash unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CorVel Corp and FirstCash

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

The idea behind CorVel Corp and FirstCash 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.