Correlation Between Orix Corp and FirstCash

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

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

Diversification Opportunities for Orix Corp and FirstCash

-0.01

Correlation Coefficient

Orix Corp  FirstCash

Good diversification

The 3 months correlation between Orix and FirstCash is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Orix Corp Ads and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash and Orix 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 Orix Corp Ads 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 Orix Corp i.e., Orix Corp and FirstCash go up and down completely randomly.

Pair Corralation between Orix Corp and FirstCash

Allowing for the 90-day total investment horizon Orix Corp Ads is expected to under-perform the FirstCash. In addition to that, Orix Corp is 1.14 times more volatile than FirstCash. It trades about 0.0 of its total potential returns per unit of risk. FirstCash is currently generating about 0.2 per unit of volatility. If you would invest  10,262  in FirstCash on December 28, 2024 and sell it today you would earn a total of  1,674  from holding FirstCash or generate 16.31% return on investment over 90 days.

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

Orix Corp Ads  vs.  FirstCash

Orix Corp Ads

Risk-Adjusted Performance

Weak

Over the last 90 days Orix Corp Ads has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Orix Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the 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 abnormal technical and fundamental indicators, FirstCash unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orix Corp and FirstCash

The main advantage of trading using opposite Orix Corp and FirstCash positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orix 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 Orix Corp Ads 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.