Correlation Between GreenSky and Shift4 Payments

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Can any of the company-specific risk be diversified away by investing in both GreenSky and Shift4 Payments 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 GreenSky and Shift4 Payments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GreenSky and Shift4 Payments, you can compare the effects of market volatilities on GreenSky and Shift4 Payments 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 GreenSky with a short position of Shift4 Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenSky and Shift4 Payments.

Diversification Opportunities for GreenSky and Shift4 Payments

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between GreenSky and Shift4 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GreenSky Inc and Shift4 Payments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shift4 Payments and GreenSky 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 GreenSky are associated (or correlated) with Shift4 Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shift4 Payments has no effect on the direction of GreenSky i.e., GreenSky and Shift4 Payments go up and down completely randomly.

Pair Corralation between GreenSky and Shift4 Payments

If you would invest  1,020  in GreenSky on March 29, 2022 and sell it today you would earn a total of  0.00  from holding GreenSky or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy5.26%
ValuesDaily Returns

GreenSky Inc  vs.  Shift4 Payments

 Performance (%) 
      Timeline 
GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, GreenSky is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Shift4 Payments 
Shift4 Performance
0 of 100
Over the last 90 days Shift4 Payments has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Shift4 Price Channel

GreenSky and Shift4 Payments Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with GreenSky and Shift4 Payments

The main advantage of trading using opposite GreenSky and Shift4 Payments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenSky position performs unexpectedly, Shift4 Payments 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 Shift4 Payments will offset losses from the drop in Shift4 Payments' long position.
The idea behind GreenSky and Shift4 Payments 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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