Correlation Between OppFi and Real Luck

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

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

Diversification Opportunities for OppFi and Real Luck

-0.78

Correlation Coefficient

OppFi  Real Luck

Pay attention - limited upside

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

Pair Corralation between OppFi and Real Luck

Given the investment horizon of 90 days OppFi is expected to generate 12.94 times less return on investment than Real Luck. But when comparing it to its historical volatility, OppFi Inc is 15.74 times less risky than Real Luck. It trades about 0.08 of its potential returns per unit of risk. Real Luck Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8.99  in Real Luck Group on September 4, 2024 and sell it today you would lose (8.82) from holding Real Luck Group or give up 98.11% of portfolio value over 90 days.

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

OppFi Inc  vs.  Real Luck Group

OppFi Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OppFi Inc are ranked lower than 19 (%) 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.

Real Luck Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Real Luck Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Real Luck reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OppFi and Real Luck

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

The idea behind OppFi Inc and Real Luck Group 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.