Correlation Between Finance Of and EZCORP

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

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

Diversification Opportunities for Finance Of and EZCORP

-0.27

Correlation Coefficient

Finance Of  EZCORP

Very good diversification

The 3 months correlation between Finance and EZCORP is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Finance of America and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and Finance Of 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 Finance of America are associated (or correlated) with EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of Finance Of i.e., Finance Of and EZCORP go up and down completely randomly.

Pair Corralation between Finance Of and EZCORP

Considering the 90-day investment horizon Finance of America is expected to under-perform the EZCORP. In addition to that, Finance Of is 1.63 times more volatile than EZCORP Inc. It trades about -0.11 of its total potential returns per unit of risk. EZCORP Inc is currently generating about 0.24 per unit of volatility. If you would invest  1,223  in EZCORP Inc on December 1, 2024 and sell it today you would earn a total of  153.00  from holding EZCORP Inc or generate 12.51% return on investment over 90 days.

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

Finance of America  vs.  EZCORP Inc

Finance of America

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finance of America are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Finance Of sustained solid returns over the last few months and may actually be approaching a breakup point.

EZCORP Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EZCORP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Finance Of and EZCORP

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

The idea behind Finance of America and EZCORP 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.