Correlation Between Consumer Portfolio and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both Consumer Portfolio and Credit Acceptance 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 Consumer Portfolio and Credit Acceptance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumer Portfolio Services and Credit Acceptance, you can compare the effects of market volatilities on Consumer Portfolio and Credit Acceptance 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 Consumer Portfolio with a short position of Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Portfolio and Credit Acceptance.
Diversification Opportunities for Consumer Portfolio and Credit Acceptance
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consumer and Credit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Portfolio Services and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance and Consumer Portfolio 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 Consumer Portfolio Services are associated (or correlated) with Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of Consumer Portfolio i.e., Consumer Portfolio and Credit Acceptance go up and down completely randomly.
Pair Corralation between Consumer Portfolio and Credit Acceptance
Given the investment horizon of 90 days Consumer Portfolio is expected to generate 4.31 times less return on investment than Credit Acceptance. In addition to that, Consumer Portfolio is 1.03 times more volatile than Credit Acceptance. It trades about 0.04 of its total potential returns per unit of risk. Credit Acceptance is currently generating about 0.16 per unit of volatility. If you would invest 45,244 in Credit Acceptance on August 30, 2024 and sell it today you would earn a total of 4,180 from holding Credit Acceptance or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumer Portfolio Services vs. Credit Acceptance
Performance |
| Timeline |
| Consumer Portfolio |
| Credit Acceptance |
Consumer Portfolio and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumer Portfolio and Credit Acceptance
The main advantage of trading using opposite Consumer Portfolio and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumer Portfolio position performs unexpectedly, Credit Acceptance 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 Credit Acceptance will offset losses from the drop in Credit Acceptance's long position.| Consumer Portfolio vs. Atlanticus Holdings Corp | Consumer Portfolio vs. Mill City Ventures | Consumer Portfolio vs. Nelnet Inc | Consumer Portfolio vs. Senmiao Technology |
| Credit Acceptance vs. World Acceptance | Credit Acceptance vs. FirstCash | Credit Acceptance vs. Dorman Products | Credit Acceptance vs. Encore Capital Group |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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