Correlation Between OneMain Holdings and Finance Of

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

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

Diversification Opportunities for OneMain Holdings and Finance Of

0.67

Correlation Coefficient

OneMain Holdings  Finance Of

Poor diversification

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

Pair Corralation between OneMain Holdings and Finance Of

Considering the 90-day investment horizon OneMain Holdings is expected to under-perform the Finance Of. But the stock apears to be less risky and, when comparing its historical volatility, OneMain Holdings is 3.66 times less risky than Finance Of. The stock trades about -0.18 of its potential returns per unit of risk. The Finance of America is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,419  in Finance of America on October 12, 2024 and sell it today you would earn a total of  521.00  from holding Finance of America or generate 21.54% return on investment over 90 days.

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

OneMain Holdings  vs.  Finance of America

OneMain Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OneMain Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting primary indicators, OneMain Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Finance of America

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Finance of America are ranked lower than 19 (%) 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.

Pair Trading with OneMain Holdings and Finance Of

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

The idea behind OneMain Holdings and Finance of America 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.