Correlation Between OppFi and NextTrip

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

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

Diversification Opportunities for OppFi and NextTrip

0.3

Correlation Coefficient

OppFi  NextTrip

Weak diversification

The 3 months correlation between OppFi and NextTrip is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip and OppFi 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 OppFi Inc are associated (or correlated) with NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of OppFi i.e., OppFi and NextTrip go up and down completely randomly.

Pair Corralation between OppFi and NextTrip

Given the investment horizon of 90 days OppFi Inc is expected to generate 0.75 times more return on investment than NextTrip. However, OppFi Inc is 1.32 times less risky than NextTrip. It trades about 0.09 of its potential returns per unit of risk. NextTrip is currently generating about 0.02 per unit of risk. If you would invest  756.00  in OppFi Inc on December 28, 2024 and sell it today you would earn a total of  176.00  from holding OppFi Inc or generate 23.28% return on investment over 90 days.

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

OppFi Inc  vs.  NextTrip

OppFi Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NextTrip

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NextTrip are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NextTrip may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with OppFi and NextTrip

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

The idea behind OppFi Inc and NextTrip 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.