Correlation Between Runway Growth and OneMain Holdings

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

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

Diversification Opportunities for Runway Growth and OneMain Holdings

0.46

Correlation Coefficient

Runway Growth  OneMain Holdings

Very weak diversification

The 3 months correlation between Runway and OneMain is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Runway Growth Finance and OneMain Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneMain Holdings and Runway Growth 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 Runway Growth Finance are associated (or correlated) with OneMain Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneMain Holdings has no effect on the direction of Runway Growth i.e., Runway Growth and OneMain Holdings go up and down completely randomly.

Pair Corralation between Runway Growth and OneMain Holdings

Given the investment horizon of 90 days Runway Growth is expected to generate 5.08 times less return on investment than OneMain Holdings. But when comparing it to its historical volatility, Runway Growth Finance is 2.2 times less risky than OneMain Holdings. It trades about 0.06 of its potential returns per unit of risk. OneMain Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,664  in OneMain Holdings on September 5, 2024 and sell it today you would earn a total of  1,063  from holding OneMain Holdings or generate 22.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Runway Growth Finance  vs.  OneMain Holdings

Runway Growth Finance

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Runway Growth Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Runway Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

OneMain Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OneMain Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting primary indicators, OneMain Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Runway Growth and OneMain Holdings

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

The idea behind Runway Growth Finance and OneMain Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.