Correlation Between Open Lending and EZCORP

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

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

Diversification Opportunities for Open Lending and EZCORP

-0.64

Correlation Coefficient

Open Lending  EZCORP

Excellent diversification

The 3 months correlation between Open and EZCORP is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Open Lending Corp and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and Open Lending 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 Open Lending Corp 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 Open Lending i.e., Open Lending and EZCORP go up and down completely randomly.

Pair Corralation between Open Lending and EZCORP

Given the investment horizon of 90 days Open Lending Corp is expected to under-perform the EZCORP. In addition to that, Open Lending is 2.24 times more volatile than EZCORP Inc. It trades about -0.24 of its total potential returns per unit of risk. EZCORP Inc is currently generating about 0.18 per unit of volatility. If you would invest  1,233  in EZCORP Inc on December 27, 2024 and sell it today you would earn a total of  266.00  from holding EZCORP Inc or generate 21.57% return on investment over 90 days.

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

Open Lending Corp  vs.  EZCORP Inc

Open Lending Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Open Lending Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

EZCORP Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EZCORP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Open Lending and EZCORP

The main advantage of trading using opposite Open Lending and EZCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Lending 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 Open Lending Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.