Correlation Between Atlanticus Holdings and SLM Corp

Can any of the company-specific risk be diversified away by investing in both Atlanticus Holdings and SLM Corp 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 SLM Corp 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 SLM Corp Pb, you can compare the effects of market volatilities on Atlanticus Holdings and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlanticus Holdings and SLM Corp.

Diversification Opportunities for Atlanticus Holdings and SLM Corp

-0.04

Correlation Coefficient

Atlanticus Holdings  SLM Corp

Good diversification

The 3 months correlation between Atlanticus and SLM is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Atlanticus Holdings Corp and SLM Corp Pb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp Pb 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp Pb has no effect on the direction of Atlanticus Holdings i.e., Atlanticus Holdings and SLM Corp go up and down completely randomly.

Pair Corralation between Atlanticus Holdings and SLM Corp

Assuming the 90 days horizon Atlanticus Holdings Corp is expected to generate 2.07 times more return on investment than SLM Corp. However, Atlanticus Holdings is 2.07 times more volatile than SLM Corp Pb. It trades about 0.09 of its potential returns per unit of risk. SLM Corp Pb is currently generating about 0.03 per unit of risk. If you would invest  2,151  in Atlanticus Holdings Corp on August 30, 2024 and sell it today you would earn a total of  257.00  from holding Atlanticus Holdings Corp or generate 11.95% return on investment over 90 days.

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

Atlanticus Holdings Corp  vs.  SLM Corp Pb

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.

SLM Corp Pb

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Atlanticus Holdings and SLM Corp

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

The idea behind Atlanticus Holdings Corp and SLM Corp Pb 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.