Correlation Between Lexinfintech Holdings and Enova International

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

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

Diversification Opportunities for Lexinfintech Holdings and Enova International

0.67

Correlation Coefficient

Lexinfintech Holdings  Enova International

Poor diversification

The 3 months correlation between Lexinfintech and Enova is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Lexinfintech Holdings and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International and Lexinfintech Holdings 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 Lexinfintech Holdings are associated (or correlated) with Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of Lexinfintech Holdings i.e., Lexinfintech Holdings and Enova International go up and down completely randomly.

Pair Corralation between Lexinfintech Holdings and Enova International

Allowing for the 90-day total investment horizon Lexinfintech Holdings is expected to generate 3.3 times more return on investment than Enova International. However, Lexinfintech Holdings is 3.3 times more volatile than Enova International. It trades about 0.26 of its potential returns per unit of risk. Enova International is currently generating about 0.15 per unit of risk. If you would invest  166.00  in Lexinfintech Holdings on August 30, 2024 and sell it today you would earn a total of  324.00  from holding Lexinfintech Holdings or generate 195.18% return on investment over 90 days.

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

Lexinfintech Holdings  vs.  Enova International

Lexinfintech Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Lexinfintech Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Lexinfintech Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Enova International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lexinfintech Holdings and Enova International

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

The idea behind Lexinfintech Holdings and Enova International 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.