Correlation Between Open Lending and AppHarvest

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

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

Diversification Opportunities for Open Lending and AppHarvest

-0.23

Correlation Coefficient

Open Lending  AppHarvest

Very good diversification

The 3 months correlation between Open and AppHarvest is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Open Lending Corp and AppHarvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppHarvest and Open Lending 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 Open Lending Corp are associated (or correlated) with AppHarvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppHarvest has no effect on the direction of Open Lending i.e., Open Lending and AppHarvest go up and down completely randomly.

Pair Corralation between Open Lending and AppHarvest

If you would invest  679.00  in Open Lending Corp on September 3, 2024 and sell it today you would lose (41.00) from holding Open Lending Corp or give up 6.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.4%
Values	Daily Returns

Open Lending Corp  vs.  AppHarvest

Open Lending Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

AppHarvest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AppHarvest has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, AppHarvest is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Open Lending and AppHarvest

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

The idea behind Open Lending Corp and AppHarvest 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.