Correlation Between World Acceptance and EZCORP

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

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

Diversification Opportunities for World Acceptance and EZCORP

0.44

Correlation Coefficient

World Acceptance  EZCORP

Very weak diversification

The 3 months correlation between World and EZCORP is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding World Acceptance and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc 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 EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of World Acceptance i.e., World Acceptance and EZCORP go up and down completely randomly.

Pair Corralation between World Acceptance and EZCORP

Given the investment horizon of 90 days World Acceptance is expected to generate 1.11 times less return on investment than EZCORP. In addition to that, World Acceptance is 1.58 times more volatile than EZCORP Inc. It trades about 0.11 of its total potential returns per unit of risk. EZCORP Inc is currently generating about 0.19 per unit of volatility. If you would invest  1,226  in EZCORP Inc on December 28, 2024 and sell it today you would earn a total of  273.00  from holding EZCORP Inc or generate 22.27% 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.  EZCORP Inc

World Acceptance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in World Acceptance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, World Acceptance exhibited solid returns over the last few months and may actually be approaching a breakup point.

EZCORP Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EZCORP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with World Acceptance and EZCORP

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

The idea behind World Acceptance and EZCORP Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.