Correlation Between OppFi and SCI Engineered

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

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

Diversification Opportunities for OppFi and SCI Engineered

-0.11

Correlation Coefficient

OppFi  SCI Engineered

Good diversification

The 3 months correlation between OppFi and SCI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and SCI Engineered Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCI Engineered Materials 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 SCI Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCI Engineered Materials has no effect on the direction of OppFi i.e., OppFi and SCI Engineered go up and down completely randomly.

Pair Corralation between OppFi and SCI Engineered

Given the investment horizon of 90 days OppFi Inc is expected to generate 2.03 times more return on investment than SCI Engineered. However, OppFi is 2.03 times more volatile than SCI Engineered Materials. It trades about 0.1 of its potential returns per unit of risk. SCI Engineered Materials is currently generating about -0.05 per unit of risk. If you would invest  770.00  in OppFi Inc on December 2, 2024 and sell it today you would earn a total of  216.00  from holding OppFi Inc or generate 28.05% return on investment over 90 days.

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

OppFi Inc  vs.  SCI Engineered Materials

OppFi Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 7 (%) 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.

SCI Engineered Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days SCI Engineered Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with OppFi and SCI Engineered

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

The idea behind OppFi Inc and SCI Engineered Materials 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.