Correlation Between Oaktree Specialty and Atlanticus Holdings

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

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

Diversification Opportunities for Oaktree Specialty and Atlanticus Holdings

-0.1

Correlation Coefficient

Oaktree Specialty  Atlanticus Holdings

Good diversification

The 3 months correlation between Oaktree and Atlanticus is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Specialty Lending 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 Oaktree Specialty 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 Oaktree Specialty Lending 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 Oaktree Specialty i.e., Oaktree Specialty and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Oaktree Specialty and Atlanticus Holdings

Given the investment horizon of 90 days Oaktree Specialty Lending is expected to generate 1.41 times more return on investment than Atlanticus Holdings. However, Oaktree Specialty is 1.41 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 0.07 per unit of risk. If you would invest  1,586  in Oaktree Specialty Lending on September 12, 2024 and sell it today you would earn a total of  47.00  from holding Oaktree Specialty Lending or generate 2.96% return on investment over 90 days.

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

Oaktree Specialty Lending  vs.  Atlanticus Holdings Corp

Oaktree Specialty Lending

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oaktree Specialty Lending are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Oaktree Specialty is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Atlanticus Holdings Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Atlanticus Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Oaktree Specialty and Atlanticus Holdings

The main advantage of trading using opposite Oaktree Specialty and Atlanticus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oaktree Specialty 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 Oaktree Specialty Lending 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.