Correlation Between Associates First and Atlanticus Holdings

Can any of the company-specific risk be diversified away by investing in both Associates First and Atlanticus Holdings 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 Associates First and Atlanticus Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Associates First Capital and Atlanticus Holdings Corp, you can compare the effects of market volatilities on Associates First and Atlanticus Holdings 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 Associates First with a short position of Atlanticus Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associates First and Atlanticus Holdings.

Diversification Opportunities for Associates First and Atlanticus Holdings

0.0

Correlation Coefficient

Associates First  Atlanticus Holdings

Pay attention - limited upside

The 3 months correlation between Associates and Atlanticus is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Associates First Capital and Atlanticus Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlanticus Holdings Corp and Associates First 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 Associates First Capital are associated (or correlated) with Atlanticus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlanticus Holdings Corp has no effect on the direction of Associates First i.e., Associates First and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Associates First and Atlanticus Holdings

Given the investment horizon of 90 days Associates First Capital is expected to generate 29.76 times more return on investment than Atlanticus Holdings. However, Associates First is 29.76 times more volatile than Atlanticus Holdings Corp. It trades about 0.04 of its potential returns per unit of risk. Atlanticus Holdings Corp is currently generating about 0.06 per unit of risk. If you would invest  0.01  in Associates First Capital on December 2, 2024 and sell it today you would earn a total of  0.00  from holding Associates First Capital or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Associates First Capital  vs.  Atlanticus Holdings Corp

Associates First Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Associates First Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Associates First is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Atlanticus Holdings Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlanticus Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Atlanticus Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Associates First and Atlanticus Holdings

The main advantage of trading using opposite Associates First and Atlanticus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associates First position performs unexpectedly, Atlanticus Holdings 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 Atlanticus Holdings will offset losses from the drop in Atlanticus Holdings' long position.

The idea behind Associates First Capital and Atlanticus Holdings Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.