Correlation Between World Acceptance and Nicholas Financial
Can any of the company-specific risk be diversified away by investing in both World Acceptance and Nicholas Financial 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 World Acceptance and Nicholas Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Acceptance and Nicholas Financial, you can compare the effects of market volatilities on World Acceptance and Nicholas Financial 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 World Acceptance with a short position of Nicholas Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Acceptance and Nicholas Financial.
Diversification Opportunities for World Acceptance and Nicholas Financial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between World and Nicholas is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding World Acceptance and Nicholas Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Financial and World 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 World Acceptance are associated (or correlated) with Nicholas Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Financial has no effect on the direction of World Acceptance i.e., World Acceptance and Nicholas Financial go up and down completely randomly.
Pair Corralation between World Acceptance and Nicholas Financial
Given the investment horizon of 90 days World Acceptance is expected to generate 4.18 times less return on investment than Nicholas Financial. But when comparing it to its historical volatility, World Acceptance is 1.04 times less risky than Nicholas Financial. It trades about 0.01 of its potential returns per unit of risk. Nicholas Financial is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Nicholas Financial on August 31, 2024 and sell it today you would earn a total of 129.00 from holding Nicholas Financial or generate 26.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 87.97% |
| Values | Daily Returns |
World Acceptance vs. Nicholas Financial
Performance |
| Timeline |
| World Acceptance |
| Nicholas Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
World Acceptance and Nicholas Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Acceptance and Nicholas Financial
The main advantage of trading using opposite World Acceptance and Nicholas Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Acceptance position performs unexpectedly, Nicholas Financial 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 Nicholas Financial will offset losses from the drop in Nicholas Financial's long position.| World Acceptance vs. FirstCash | World Acceptance vs. Enova International | World Acceptance vs. Green Dot | World Acceptance vs. Medallion Financial Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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