Correlation Between Jiayin and EverQuote

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

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

Diversification Opportunities for Jiayin and EverQuote

0.82

Correlation Coefficient

Jiayin  EverQuote

Very poor diversification

The 3 months correlation between Jiayin and EverQuote is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Jiayin Group and EverQuote Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverQuote Class A and Jiayin 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 Jiayin Group are associated (or correlated) with EverQuote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverQuote Class A has no effect on the direction of Jiayin i.e., Jiayin and EverQuote go up and down completely randomly.

Pair Corralation between Jiayin and EverQuote

Given the investment horizon of 90 days Jiayin Group is expected to generate 1.59 times more return on investment than EverQuote. However, Jiayin is 1.59 times more volatile than EverQuote Class A. It trades about 0.2 of its potential returns per unit of risk. EverQuote Class A is currently generating about 0.12 per unit of risk. If you would invest  637.00  in Jiayin Group on December 30, 2024 and sell it today you would earn a total of  758.00  from holding Jiayin Group or generate 119.0% return on investment over 90 days.

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

Jiayin Group  vs.  EverQuote Class A

Jiayin Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jiayin Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile forward indicators, Jiayin displayed solid returns over the last few months and may actually be approaching a breakup point.

EverQuote Class A

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EverQuote Class A are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, EverQuote reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jiayin and EverQuote

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

The idea behind Jiayin Group and EverQuote Class A 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.