Correlation Between Oaktree Specialty and Credit Acceptance

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

By analyzing existing cross correlation between Oaktree Specialty Lending and Credit Acceptance, you can compare the effects of market volatilities on Oaktree Specialty and Credit Acceptance 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 Oaktree Specialty with a short position of Credit Acceptance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oaktree Specialty and Credit Acceptance.

Diversification Opportunities for Oaktree Specialty and Credit Acceptance

0.0

Correlation Coefficient

Oaktree Specialty  Credit Acceptance

Pay attention - limited upside

The 3 months correlation between Oaktree and Credit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oaktree Specialty Lending and Credit Acceptance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Acceptance and Oaktree Specialty 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 Oaktree Specialty Lending are associated (or correlated) with Credit Acceptance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Acceptance has no effect on the direction of Oaktree Specialty i.e., Oaktree Specialty and Credit Acceptance go up and down completely randomly.

Pair Corralation between Oaktree Specialty and Credit Acceptance

If you would invest (100.00) in Credit Acceptance on February 23, 2024 and sell it today you would earn a total of  100.00  from holding Credit Acceptance or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Oaktree Specialty Lending  vs.  Credit Acceptance

Oaktree Specialty Lending

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oaktree Specialty Lending has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Oaktree Specialty is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Credit Acceptance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Acceptance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Oaktree Specialty and Credit Acceptance

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

The idea behind Oaktree Specialty Lending and Credit Acceptance 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.