Correlation Between Distoken Acquisition and FirstCash

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

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

Diversification Opportunities for Distoken Acquisition and FirstCash

0.27

Correlation Coefficient

Distoken Acquisition  FirstCash

Modest diversification

The 3 months correlation between Distoken and FirstCash is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Distoken Acquisition and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash and Distoken Acquisition 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 Distoken Acquisition 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 Distoken Acquisition i.e., Distoken Acquisition and FirstCash go up and down completely randomly.

Pair Corralation between Distoken Acquisition and FirstCash

Given the investment horizon of 90 days Distoken Acquisition is expected to generate 19.64 times less return on investment than FirstCash. In addition to that, Distoken Acquisition is 1.44 times more volatile than FirstCash. It trades about 0.01 of its total potential returns per unit of risk. FirstCash is currently generating about 0.15 per unit of volatility. If you would invest  11,264  in FirstCash on November 20, 2024 and sell it today you would earn a total of  461.00  from holding FirstCash or generate 4.09% return on investment over 90 days.

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

Distoken Acquisition  vs.  FirstCash

Distoken Acquisition

Risk-Adjusted Performance

Very Weak

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

FirstCash

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, FirstCash may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Distoken Acquisition and FirstCash

The main advantage of trading using opposite Distoken Acquisition and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Distoken Acquisition 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 Distoken Acquisition 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.