Correlation Between Enova International and Credit Acceptance
Can any of the company-specific risk be diversified away by investing in both Enova International 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 Enova International and Credit Acceptance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enova International and Credit Acceptance, you can compare the effects of market volatilities on Enova International 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 Enova International with a short position of Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enova International and Credit Acceptance.
Diversification Opportunities for Enova International and Credit Acceptance
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Enova and Credit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Enova International and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance and Enova International 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 Enova International 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 Enova International i.e., Enova International and Credit Acceptance go up and down completely randomly.
Pair Corralation between Enova International and Credit Acceptance
Given the investment horizon of 90 days Enova International is expected to generate 1.11 times more return on investment than Credit Acceptance. However, Enova International is 1.11 times more volatile than Credit Acceptance. It trades about 0.28 of its potential returns per unit of risk. Credit Acceptance is currently generating about 0.09 per unit of risk. If you would invest 8,054 in Enova International on August 26, 2024 and sell it today you would earn a total of 2,420 from holding Enova International or generate 30.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enova International vs. Credit Acceptance
Performance |
| Timeline |
| Enova International |
| Credit Acceptance |
Enova International and Credit Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enova International and Credit Acceptance
The main advantage of trading using opposite Enova International and Credit Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enova International 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.| Enova International vs. SLM Corp | Enova International vs. Orix Corp Ads | Enova International vs. FirstCash | Enova International vs. Medallion Financial Corp |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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