Correlation Between Atlanticus Holdings and Federal Agricultural

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

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

Diversification Opportunities for Atlanticus Holdings and Federal Agricultural

0.27

Correlation Coefficient

Atlanticus Holdings  Federal Agricultural

Modest diversification

The 3 months correlation between Atlanticus and Federal is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Atlanticus Holdings Corp and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural and Atlanticus 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 Atlanticus Holdings Corp are associated (or correlated) with Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Atlanticus Holdings i.e., Atlanticus Holdings and Federal Agricultural go up and down completely randomly.

Pair Corralation between Atlanticus Holdings and Federal Agricultural

Assuming the 90 days horizon Atlanticus Holdings is expected to generate 163.44 times less return on investment than Federal Agricultural. But when comparing it to its historical volatility, Atlanticus Holdings Corp is 226.85 times less risky than Federal Agricultural. It trades about 0.17 of its potential returns per unit of risk. Federal Agricultural Mortgage is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  15,151  in Federal Agricultural Mortgage on August 30, 2024 and sell it today you would earn a total of  849.00  from holding Federal Agricultural Mortgage or generate 5.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.38%
Values	Daily Returns

Atlanticus Holdings Corp  vs.  Federal Agricultural Mortgage

Atlanticus Holdings Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent fundamental indicators, Atlanticus Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Federal Agricultural

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Federal Agricultural Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unsteady basic indicators, Federal Agricultural sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlanticus Holdings and Federal Agricultural

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

The idea behind Atlanticus Holdings Corp and Federal Agricultural Mortgage 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.