Correlation Between First Acceptance and Essent
Can any of the company-specific risk be diversified away by investing in both First Acceptance and Essent 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 First Acceptance and Essent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Acceptance Corp and Essent Group, you can compare the effects of market volatilities on First Acceptance and Essent 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 First Acceptance with a short position of Essent. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Acceptance and Essent.
Diversification Opportunities for First Acceptance and Essent
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Essent is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Acceptance Corp and Essent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essent Group and First 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 First Acceptance Corp are associated (or correlated) with Essent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essent Group has no effect on the direction of First Acceptance i.e., First Acceptance and Essent go up and down completely randomly.
Pair Corralation between First Acceptance and Essent
If you would invest 80.00 in First Acceptance Corp on August 31, 2024 and sell it today you would earn a total of 0.00 from holding First Acceptance Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
First Acceptance Corp vs. Essent Group
Performance |
| Timeline |
| First Acceptance Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Essent Group |
First Acceptance and Essent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Acceptance and Essent
The main advantage of trading using opposite First Acceptance and Essent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Acceptance position performs unexpectedly, Essent 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 Essent will offset losses from the drop in Essent's long position.| First Acceptance vs. Essent Group | First Acceptance vs. James River Group | First Acceptance vs. MGIC Investment Corp | First Acceptance vs. Employers Holdings |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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