Correlation Between Bread Financial and Atlanticus Holdings

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

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

Diversification Opportunities for Bread Financial and Atlanticus Holdings

0.66

Correlation Coefficient

Bread Financial  Atlanticus Holdings

Poor diversification

The 3 months correlation between Bread and Atlanticus is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bread Financial Holdings 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 Bread Financial 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 Bread Financial Holdings 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 Bread Financial i.e., Bread Financial and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Bread Financial and Atlanticus Holdings

Considering the 90-day investment horizon Bread Financial Holdings is expected to generate 5.36 times more return on investment than Atlanticus Holdings. However, Bread Financial is 5.36 times more volatile than Atlanticus Holdings Corp. It trades about 0.05 of its potential returns per unit of risk. Atlanticus Holdings Corp is currently generating about 0.17 per unit of risk. If you would invest  5,652  in Bread Financial Holdings on September 5, 2024 and sell it today you would earn a total of  463.00  from holding Bread Financial Holdings or generate 8.19% return on investment over 90 days.

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

Bread Financial Holdings  vs.  Atlanticus Holdings Corp

Bread Financial Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bread Financial Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Bread Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak fundamental indicators, Atlanticus Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bread Financial and Atlanticus Holdings

The main advantage of trading using opposite Bread Financial and Atlanticus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bread Financial 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 Bread Financial Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.