Correlation Between Credit Acceptance and Horizon Space
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance and Horizon Space 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 Credit Acceptance and Horizon Space into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Horizon Space Acquisition, you can compare the effects of market volatilities on Credit Acceptance and Horizon Space 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 Credit Acceptance with a short position of Horizon Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Horizon Space.
Diversification Opportunities for Credit Acceptance and Horizon Space
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Credit and Horizon is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and Horizon Space Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Horizon Space Acquisition and Credit Acceptance 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 Credit Acceptance are associated (or correlated) with Horizon Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Horizon Space Acquisition has no effect on the direction of Credit Acceptance i.e., Credit Acceptance and Horizon Space go up and down completely randomly.
Pair Corralation between Credit Acceptance and Horizon Space
Given the investment horizon of 90 days Credit Acceptance is expected to generate 2.03 times less return on investment than Horizon Space. But when comparing it to its historical volatility, Credit Acceptance is 19.7 times less risky than Horizon Space. It trades about 0.41 of its potential returns per unit of risk. Horizon Space Acquisition is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2.97 in Horizon Space Acquisition on September 13, 2024 and sell it today you would lose (0.49) from holding Horizon Space Acquisition or give up 16.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 27.27% |
| Values | Daily Returns |
Credit Acceptance vs. Horizon Space Acquisition
Performance |
| Timeline |
| Credit Acceptance |
| Horizon Space Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Credit Acceptance and Horizon Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Horizon Space
The main advantage of trading using opposite Credit Acceptance and Horizon Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance position performs unexpectedly, Horizon Space 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 Horizon Space will offset losses from the drop in Horizon Space's long position.| Credit Acceptance vs. Visa Class A | Credit Acceptance vs. PayPal Holdings | Credit Acceptance vs. Upstart Holdings | Credit Acceptance vs. Mastercard |
| Horizon Space vs. United Parks Resorts | Horizon Space vs. Funko Inc | Horizon Space vs. Canlan Ice Sports | Horizon Space vs. Saia Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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