Correlation Between Credit Acceptance and Orix Corp
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance and Orix Corp 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 Orix Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Orix Corp Ads, you can compare the effects of market volatilities on Credit Acceptance and Orix Corp 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 Orix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Orix Corp.
Diversification Opportunities for Credit Acceptance and Orix Corp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Credit and Orix is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and Orix Corp Ads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orix Corp Ads 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 Orix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orix Corp Ads has no effect on the direction of Credit Acceptance i.e., Credit Acceptance and Orix Corp go up and down completely randomly.
Pair Corralation between Credit Acceptance and Orix Corp
Given the investment horizon of 90 days Credit Acceptance is expected to generate 1.49 times more return on investment than Orix Corp. However, Credit Acceptance is 1.49 times more volatile than Orix Corp Ads. It trades about -0.1 of its potential returns per unit of risk. Orix Corp Ads is currently generating about -0.33 per unit of risk. If you would invest 55,604 in Credit Acceptance on January 19, 2024 and sell it today you would lose (2,349) from holding Credit Acceptance or give up 4.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Acceptance vs. Orix Corp Ads
Performance |
| Timeline |
| Credit Acceptance |
| Orix Corp Ads |
Credit Acceptance and Orix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Orix Corp
The main advantage of trading using opposite Credit Acceptance and Orix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance position performs unexpectedly, Orix Corp 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 Orix Corp will offset losses from the drop in Orix Corp's long position.| Credit Acceptance vs. Mersana Therapeutics | Credit Acceptance vs. Amtech Systems | Credit Acceptance vs. First United |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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