Correlation Between Credit Acceptance and EZCORP

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Credit 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 Credit Acceptance and EZCORP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and EZCORP Inc, you can compare the effects of market volatilities on Credit 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 Credit Acceptance with a short position of EZCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and EZCORP.

Diversification Opportunities for Credit Acceptance and EZCORP

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Credit and EZCORP is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc and Credit 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 Credit 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 Credit Acceptance i.e., Credit Acceptance and EZCORP go up and down completely randomly.

Pair Corralation between Credit Acceptance and EZCORP

Given the investment horizon of 90 days Credit Acceptance is expected to generate 14.33 times less return on investment than EZCORP. But when comparing it to its historical volatility, Credit Acceptance is 1.31 times less risky than EZCORP. It trades about 0.02 of its potential returns per unit of risk. EZCORP Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,059  in EZCORP Inc on December 30, 2023 and sell it today you would earn a total of  74.00  from holding EZCORP Inc or generate 6.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Credit Acceptance  vs.  EZCORP Inc

 Performance 
       Timeline  
Credit Acceptance 

Risk-Adjusted Performance

2 of 100

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

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 16 (%) 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.

Credit Acceptance and EZCORP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Credit Acceptance and EZCORP

The main advantage of trading using opposite Credit Acceptance and EZCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit 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 Credit 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.
Check out your portfolio center.
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Portfolio Analyzer
Portfolio analysis module that provides access to portfolio diagnostics and optimization engine
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges