Correlation Between FirstCash and Green Dot

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

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

Diversification Opportunities for FirstCash and Green Dot

0.27

Correlation Coefficient

FirstCash  Green Dot

Modest diversification

The 3 months correlation between FirstCash and Green is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Green Dot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Dot and FirstCash 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 FirstCash are associated (or correlated) with Green Dot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Dot has no effect on the direction of FirstCash i.e., FirstCash and Green Dot go up and down completely randomly.

Pair Corralation between FirstCash and Green Dot

Given the investment horizon of 90 days FirstCash is expected to under-perform the Green Dot. But the stock apears to be less risky and, when comparing its historical volatility, FirstCash is 2.5 times less risky than Green Dot. The stock trades about -0.07 of its potential returns per unit of risk. The Green Dot is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,093  in Green Dot on September 2, 2024 and sell it today you would lose (66.00) from holding Green Dot or give up 6.04% of portfolio value over 90 days.

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

FirstCash  vs.  Green Dot

FirstCash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FirstCash has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Green Dot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Dot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Green Dot is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FirstCash and Green Dot

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

The idea behind FirstCash and Green Dot 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.