Correlation Between Upstart Holdings and Regional Management

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

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

Diversification Opportunities for Upstart Holdings and Regional Management

0.78

Correlation Coefficient

Upstart Holdings  Regional Management

Poor diversification

The 3 months correlation between Upstart and Regional is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Upstart Holdings and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management Corp 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 Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of Upstart Holdings i.e., Upstart Holdings and Regional Management go up and down completely randomly.

Pair Corralation between Upstart Holdings and Regional Management

Given the investment horizon of 90 days Upstart Holdings is expected to under-perform the Regional Management. In addition to that, Upstart Holdings is 2.98 times more volatile than Regional Management Corp. It trades about -0.04 of its total potential returns per unit of risk. Regional Management Corp is currently generating about -0.03 per unit of volatility. If you would invest  3,322  in Regional Management Corp on December 28, 2024 and sell it today you would lose (162.00) from holding Regional Management Corp or give up 4.88% of portfolio value over 90 days.

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

Upstart Holdings  vs.  Regional Management Corp

Upstart Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Upstart Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Regional Management Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Upstart Holdings and Regional Management

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

The idea behind Upstart Holdings and Regional Management Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.