Correlation Between Upstart Holdings and Affirm Holdings

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

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

Diversification Opportunities for Upstart Holdings and Affirm Holdings

0.88

Correlation Coefficient

Upstart Holdings  Affirm Holdings

Very poor diversification

The 3 months correlation between Upstart and Affirm is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Upstart 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 Upstart Holdings are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and Affirm Holdings go up and down completely randomly.

Pair Corralation between Upstart Holdings and Affirm Holdings

Given the investment horizon of 90 days Upstart Holdings is expected to generate 1.47 times more return on investment than Affirm Holdings. However, Upstart Holdings is 1.47 times more volatile than Affirm Holdings. It trades about 0.22 of its potential returns per unit of risk. Affirm Holdings is currently generating about 0.17 per unit of risk. If you would invest  3,512  in Upstart Holdings on September 14, 2024 and sell it today you would earn a total of  4,923  from holding Upstart Holdings or generate 140.18% return on investment over 90 days.

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

Upstart Holdings  vs.  Affirm Holdings

Upstart Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Affirm Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Affirm Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Affirm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Upstart Holdings and Affirm Holdings

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

The idea behind Upstart Holdings and Affirm Holdings 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.