Correlation Between Oportun Financial and FirstCash

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

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

Diversification Opportunities for Oportun Financial and FirstCash

0.63

Correlation Coefficient

Oportun Financial  FirstCash

Poor diversification

The 3 months correlation between Oportun and FirstCash is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Oportun Financial Corp and FirstCash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstCash and Oportun Financial 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 Oportun Financial Corp are associated (or correlated) with FirstCash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstCash has no effect on the direction of Oportun Financial i.e., Oportun Financial and FirstCash go up and down completely randomly.

Pair Corralation between Oportun Financial and FirstCash

Given the investment horizon of 90 days Oportun Financial Corp is expected to generate 4.49 times more return on investment than FirstCash. However, Oportun Financial is 4.49 times more volatile than FirstCash. It trades about 0.13 of its potential returns per unit of risk. FirstCash is currently generating about 0.2 per unit of risk. If you would invest  398.00  in Oportun Financial Corp on December 30, 2024 and sell it today you would earn a total of  163.00  from holding Oportun Financial Corp or generate 40.95% return on investment over 90 days.

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

Oportun Financial Corp  vs.  FirstCash

Oportun Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oportun Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Oportun Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

FirstCash

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, FirstCash unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Oportun Financial and FirstCash

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

The idea behind Oportun Financial Corp and FirstCash 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.