Correlation Between QCR Holdings and World Acceptance
Can any of the company-specific risk be diversified away by investing in both QCR Holdings and World 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 QCR Holdings and World Acceptance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between QCR Holdings and World Acceptance, you can compare the effects of market volatilities on QCR Holdings and World 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 QCR Holdings with a short position of World Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of QCR Holdings and World Acceptance.
Diversification Opportunities for QCR Holdings and World Acceptance
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between QCR and World is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding QCR Holdings and World Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Acceptance and QCR Holdings 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 QCR Holdings are associated (or correlated) with World Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Acceptance has no effect on the direction of QCR Holdings i.e., QCR Holdings and World Acceptance go up and down completely randomly.
Pair Corralation between QCR Holdings and World Acceptance
Given the investment horizon of 90 days QCR Holdings is expected to generate 0.74 times more return on investment than World Acceptance. However, QCR Holdings is 1.35 times less risky than World Acceptance. It trades about 0.11 of its potential returns per unit of risk. World Acceptance is currently generating about 0.01 per unit of risk. If you would invest 5,471 in QCR Holdings on September 4, 2024 and sell it today you would earn a total of 3,585 from holding QCR Holdings or generate 65.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
QCR Holdings vs. World Acceptance
Performance |
| Timeline |
| QCR Holdings |
| World Acceptance |
QCR Holdings and World Acceptance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with QCR Holdings and World Acceptance
The main advantage of trading using opposite QCR Holdings and World Acceptance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if QCR Holdings position performs unexpectedly, World 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 World Acceptance will offset losses from the drop in World Acceptance's long position.| QCR Holdings vs. Community West Bancshares | QCR Holdings vs. First Financial Northwest | QCR Holdings vs. CF Bankshares | QCR Holdings vs. Home Federal Bancorp |
| World Acceptance vs. FirstCash | World Acceptance vs. Enova International | World Acceptance vs. Green Dot | World Acceptance vs. Medallion Financial Corp |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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