Correlation Between Credit Acceptance and Lexinfintech Holdings
Can any of the company-specific risk be diversified away by investing in both Credit Acceptance and Lexinfintech 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 Credit Acceptance and Lexinfintech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Acceptance and Lexinfintech Holdings, you can compare the effects of market volatilities on Credit Acceptance and Lexinfintech 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 Credit Acceptance with a short position of Lexinfintech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Acceptance and Lexinfintech Holdings.
Diversification Opportunities for Credit Acceptance and Lexinfintech Holdings
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Credit and Lexinfintech is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Credit Acceptance and Lexinfintech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexinfintech Holdings 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 Lexinfintech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexinfintech Holdings has no effect on the direction of Credit Acceptance i.e., Credit Acceptance and Lexinfintech Holdings go up and down completely randomly.
Pair Corralation between Credit Acceptance and Lexinfintech Holdings
Given the investment horizon of 90 days Credit Acceptance is expected to generate 0.59 times more return on investment than Lexinfintech Holdings. However, Credit Acceptance is 1.7 times less risky than Lexinfintech Holdings. It trades about 0.04 of its potential returns per unit of risk. Lexinfintech Holdings is currently generating about -0.02 per unit of risk. If you would invest 44,221 in Credit Acceptance on January 21, 2024 and sell it today you would earn a total of 9,327 from holding Credit Acceptance or generate 21.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Credit Acceptance vs. Lexinfintech Holdings
Performance |
| Timeline |
| Credit Acceptance |
| Lexinfintech Holdings |
Credit Acceptance and Lexinfintech Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Acceptance and Lexinfintech Holdings
The main advantage of trading using opposite Credit Acceptance and Lexinfintech Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Acceptance position performs unexpectedly, Lexinfintech 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 Lexinfintech Holdings will offset losses from the drop in Lexinfintech Holdings' long position.| Credit Acceptance vs. Visa Class A | Credit Acceptance vs. PayPal Holdings | Credit Acceptance vs. Mastercard |
| Lexinfintech Holdings vs. Visa Class A | Lexinfintech Holdings vs. PayPal Holdings | Lexinfintech Holdings vs. Mastercard |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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