Correlation Between Credit Acceptance and Livetech
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance and Livetech 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 Livetech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Livetech da Bahia, you can compare the effects of market volatilities on Credit Acceptance and Livetech 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 Livetech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Livetech.
Diversification Opportunities for Credit Acceptance and Livetech
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Credit and Livetech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and Livetech da Bahia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Livetech da Bahia 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 Livetech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Livetech da Bahia has no effect on the direction of Credit Acceptance i.e., Credit Acceptance and Livetech go up and down completely randomly.
Pair Corralation between Credit Acceptance and Livetech
Assuming the 90 days trading horizon Credit Acceptance is expected to generate 0.63 times more return on investment than Livetech. However, Credit Acceptance is 1.59 times less risky than Livetech. It trades about 0.03 of its potential returns per unit of risk. Livetech da Bahia is currently generating about -0.02 per unit of risk. If you would invest 25,800 in Credit Acceptance on August 30, 2024 and sell it today you would earn a total of 6,700 from holding Credit Acceptance or generate 25.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 98.8% |
| Values | Daily Returns |
Credit Acceptance vs. Livetech da Bahia
Performance |
| Timeline |
| Credit Acceptance |
| Livetech da Bahia |
Credit Acceptance and Livetech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Livetech
The main advantage of trading using opposite Credit Acceptance and Livetech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance position performs unexpectedly, Livetech 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 Livetech will offset losses from the drop in Livetech's long position.| Credit Acceptance vs. Extra Space Storage | Credit Acceptance vs. Warner Music Group | Credit Acceptance vs. GP Investments | Credit Acceptance vs. G2D Investments |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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