Correlation Between World Acceptance and Enova International

Can any of the company-specific risk be diversified away by investing in both World Acceptance and Enova International 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 World Acceptance and Enova International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between World Acceptance and Enova International, you can compare the effects of market volatilities on World Acceptance and Enova International 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 World Acceptance with a short position of Enova International. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Acceptance and Enova International.

Diversification Opportunities for World Acceptance and Enova International

0.46

Correlation Coefficient

World Acceptance  Enova International

Very weak diversification

The 3 months correlation between World and Enova is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding World Acceptance and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International and World Acceptance 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 World Acceptance are associated (or correlated) with Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of World Acceptance i.e., World Acceptance and Enova International go up and down completely randomly.

Pair Corralation between World Acceptance and Enova International

Given the investment horizon of 90 days World Acceptance is expected to generate 4.63 times less return on investment than Enova International. In addition to that, World Acceptance is 1.01 times more volatile than Enova International. It trades about 0.03 of its total potential returns per unit of risk. Enova International is currently generating about 0.15 per unit of volatility. If you would invest  8,573  in Enova International on August 30, 2024 and sell it today you would earn a total of  1,981  from holding Enova International or generate 23.11% return on investment over 90 days.

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

World Acceptance  vs.  Enova International

World Acceptance

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in World Acceptance are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, World Acceptance is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Enova International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Enova International sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with World Acceptance and Enova International

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

The idea behind World Acceptance and Enova International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.