Correlation Between Upstart Holdings and Oportun Financial

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

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

Diversification Opportunities for Upstart Holdings and Oportun Financial

0.8

Correlation Coefficient

Upstart Holdings  Oportun Financial

Very poor diversification

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

Pair Corralation between Upstart Holdings and Oportun Financial

Given the investment horizon of 90 days Upstart Holdings is expected to generate 1.79 times more return on investment than Oportun Financial. However, Upstart Holdings is 1.79 times more volatile than Oportun Financial Corp. It trades about 0.2 of its potential returns per unit of risk. Oportun Financial Corp is currently generating about 0.15 per unit of risk. If you would invest  3,769  in Upstart Holdings on September 17, 2024 and sell it today you would earn a total of  4,677  from holding Upstart Holdings or generate 124.09% return on investment over 90 days.

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

Upstart Holdings  vs.  Oportun Financial Corp

Upstart Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Upstart Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Upstart Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Oportun Financial Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oportun Financial Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Oportun Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Upstart Holdings and Oportun Financial

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

The idea behind Upstart Holdings and Oportun Financial Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.