Correlation Between FirstCash and Open Lending

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

By analyzing existing cross correlation between FirstCash and Open Lending Corp, you can compare the effects of market volatilities on FirstCash and Open Lending 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 Open Lending. Check out your portfolio center. Please also check ongoing floating volatility patterns of FirstCash and Open Lending.

Diversification Opportunities for FirstCash and Open Lending

-0.16

Correlation Coefficient

FirstCash  Open Lending

Good diversification

The 3 months correlation between FirstCash and Open is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding FirstCash and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp 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 Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of FirstCash i.e., FirstCash and Open Lending go up and down completely randomly.

Pair Corralation between FirstCash and Open Lending

Given the investment horizon of 90 days FirstCash is expected to generate 17.14 times less return on investment than Open Lending. But when comparing it to its historical volatility, FirstCash is 2.82 times less risky than Open Lending. It trades about 0.02 of its potential returns per unit of risk. Open Lending Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Open Lending Corp on May 7, 2025 and sell it today you would earn a total of  57.00  from holding Open Lending Corp or generate 36.77% return on investment over 90 days.

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

FirstCash  vs.  Open Lending Corp

FirstCash

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FirstCash are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, FirstCash is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Open Lending Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Open Lending displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FirstCash and Open Lending

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

The idea behind FirstCash and Open Lending 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.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.