Correlation Between Zip Co and Atlanticus Holdings

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

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

Diversification Opportunities for Zip Co and Atlanticus Holdings

-0.32

Correlation Coefficient

Zip Co  Atlanticus Holdings

Very good diversification

The 3 months correlation between Zip and Atlanticus is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Zip Co Limited 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 Zip Co 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 Zip Co Limited 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 Zip Co i.e., Zip Co and Atlanticus Holdings go up and down completely randomly.

Pair Corralation between Zip Co and Atlanticus Holdings

Assuming the 90 days horizon Zip Co Limited is expected to under-perform the Atlanticus Holdings. In addition to that, Zip Co is 7.73 times more volatile than Atlanticus Holdings Corp. It trades about -0.08 of its total potential returns per unit of risk. Atlanticus Holdings Corp is currently generating about 0.21 per unit of volatility. If you would invest  2,239  in Atlanticus Holdings Corp on December 2, 2024 and sell it today you would earn a total of  124.00  from holding Atlanticus Holdings Corp or generate 5.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

Zip Co Limited  vs.  Atlanticus Holdings Corp

Zip Co Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zip Co Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Atlanticus Holdings Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Zip Co and Atlanticus Holdings

The main advantage of trading using opposite Zip Co and Atlanticus Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zip Co 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 Zip Co Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.