Correlation Between EZCORP and Nelnet

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

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

Diversification Opportunities for EZCORP and Nelnet

-0.48

Correlation Coefficient

EZCORP  Nelnet

Very good diversification

The 3 months correlation between EZCORP and Nelnet is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EZCORP Inc and Nelnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelnet Inc and EZCORP 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 EZCORP Inc are associated (or correlated) with Nelnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nelnet Inc has no effect on the direction of EZCORP i.e., EZCORP and Nelnet go up and down completely randomly.

Pair Corralation between EZCORP and Nelnet

Given the investment horizon of 90 days EZCORP Inc is expected to generate 1.27 times more return on investment than Nelnet. However, EZCORP is 1.27 times more volatile than Nelnet Inc. It trades about 0.05 of its potential returns per unit of risk. Nelnet Inc is currently generating about 0.03 per unit of risk. If you would invest  815.00  in EZCORP Inc on September 20, 2024 and sell it today you would earn a total of  385.00  from holding EZCORP Inc or generate 47.24% return on investment over 90 days.

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

EZCORP Inc  vs.  Nelnet Inc

EZCORP Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EZCORP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nelnet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nelnet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with EZCORP and Nelnet

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

The idea behind EZCORP Inc and Nelnet 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.