Correlation Between FirstCash and Nerdwallet

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

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

Diversification Opportunities for FirstCash and Nerdwallet

-0.37

Correlation Coefficient

FirstCash  Nerdwallet

Very good diversification

The 3 months correlation between FirstCash and Nerdwallet is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Nerdwallet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nerdwallet 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 Nerdwallet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nerdwallet has no effect on the direction of FirstCash i.e., FirstCash and Nerdwallet go up and down completely randomly.

Pair Corralation between FirstCash and Nerdwallet

Given the investment horizon of 90 days FirstCash is expected to under-perform the Nerdwallet. But the stock apears to be less risky and, when comparing its historical volatility, FirstCash is 3.18 times less risky than Nerdwallet. The stock trades about -0.07 of its potential returns per unit of risk. The Nerdwallet is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,260  in Nerdwallet on September 2, 2024 and sell it today you would earn a total of  140.00  from holding Nerdwallet or generate 11.11% return on investment over 90 days.

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

FirstCash  vs.  Nerdwallet

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.

Nerdwallet

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nerdwallet are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental indicators, Nerdwallet unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FirstCash and Nerdwallet

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

The idea behind FirstCash and Nerdwallet 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 Transaction History module to view history of all your transactions and understand their impact on performance.