Correlation Between FirstCash and Home Bancorp

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

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

Diversification Opportunities for FirstCash and Home Bancorp

0.24

Correlation Coefficient

FirstCash  Home Bancorp

Modest diversification

The 3 months correlation between FirstCash and Home is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Home Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Bancorp and FirstCash 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 FirstCash are associated (or correlated) with Home Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Bancorp has no effect on the direction of FirstCash i.e., FirstCash and Home Bancorp go up and down completely randomly.

Pair Corralation between FirstCash and Home Bancorp

Given the investment horizon of 90 days FirstCash is expected to generate 1.09 times more return on investment than Home Bancorp. However, FirstCash is 1.09 times more volatile than Home Bancorp. It trades about 0.15 of its potential returns per unit of risk. Home Bancorp is currently generating about -0.03 per unit of risk. If you would invest  13,310  in FirstCash on July 23, 2025 and sell it today you would earn a total of  2,530  from holding FirstCash or generate 19.01% return on investment over 90 days.

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

FirstCash  vs.  Home Bancorp

FirstCash

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating technical and fundamental indicators, FirstCash unveiled solid returns over the last few months and may actually be approaching a breakup point.

Home Bancorp

Risk-Adjusted Performance

Weakest

Over the last 90 days Home Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Home Bancorp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with FirstCash and Home Bancorp

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

The idea behind FirstCash and Home Bancorp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.