Correlation Between OppFi and DATA Communications

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

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

Diversification Opportunities for OppFi and DATA Communications

-0.8

Correlation Coefficient

OppFi  DATA Communications

Pay attention - limited upside

The 3 months correlation between OppFi and DATA is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding OppFi Inc and DATA Communications Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATA Communications and OppFi 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 OppFi Inc are associated (or correlated) with DATA Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATA Communications has no effect on the direction of OppFi i.e., OppFi and DATA Communications go up and down completely randomly.

Pair Corralation between OppFi and DATA Communications

Given the investment horizon of 90 days OppFi Inc is expected to generate 1.15 times more return on investment than DATA Communications. However, OppFi is 1.15 times more volatile than DATA Communications Management. It trades about 0.08 of its potential returns per unit of risk. DATA Communications Management is currently generating about 0.03 per unit of risk. If you would invest  204.00  in OppFi Inc on September 12, 2024 and sell it today you would earn a total of  481.00  from holding OppFi Inc or generate 235.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

OppFi Inc  vs.  DATA Communications Management

OppFi Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, OppFi demonstrated solid returns over the last few months and may actually be approaching a breakup point.

DATA Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATA Communications Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with OppFi and DATA Communications

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

The idea behind OppFi Inc and DATA Communications Management 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.