Correlation Between Upstart Holdings and OneMain Holdings

Can any of the company-specific risk be diversified away by investing in both Upstart Holdings and OneMain 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 OneMain 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 OneMain Holdings, you can compare the effects of market volatilities on Upstart Holdings and OneMain 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 OneMain Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Upstart Holdings and OneMain Holdings.

Diversification Opportunities for Upstart Holdings and OneMain Holdings

0.9

Correlation Coefficient

Upstart Holdings  OneMain Holdings

Almost no diversification

The 3 months correlation between Upstart and OneMain is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain 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 OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and OneMain Holdings go up and down completely randomly.

Pair Corralation between Upstart Holdings and OneMain Holdings

Given the investment horizon of 90 days Upstart Holdings is expected to generate 3.86 times more return on investment than OneMain Holdings. However, Upstart Holdings is 3.86 times more volatile than OneMain Holdings. It trades about -0.03 of its potential returns per unit of risk. OneMain Holdings is currently generating about -0.26 per unit of risk. If you would invest  7,406  in Upstart Holdings on September 23, 2024 and sell it today you would lose (566.00) from holding Upstart Holdings or give up 7.64% of portfolio value over 90 days.

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

Upstart Holdings  vs.  OneMain Holdings

Upstart Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 11 (%) 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.

OneMain Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in OneMain Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal primary indicators, OneMain Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Upstart Holdings and OneMain Holdings

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

The idea behind Upstart Holdings and OneMain 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.