Correlation Between Atlanticus Holdings and XS Financial

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

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

Diversification Opportunities for Atlanticus Holdings and XS Financial

0.34

Correlation Coefficient

Atlanticus Holdings  XS Financial

Weak diversification

The 3 months correlation between Atlanticus and XSHLF is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Atlanticus Holdings Corp and XS Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XS Financial and Atlanticus Holdings 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 Atlanticus Holdings Corp are associated (or correlated) with XS Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XS Financial has no effect on the direction of Atlanticus Holdings i.e., Atlanticus Holdings and XS Financial go up and down completely randomly.

Pair Corralation between Atlanticus Holdings and XS Financial

Assuming the 90 days horizon Atlanticus Holdings is expected to generate 3.69 times less return on investment than XS Financial. But when comparing it to its historical volatility, Atlanticus Holdings Corp is 2.76 times less risky than XS Financial. It trades about 0.17 of its potential returns per unit of risk. XS Financial is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  3.60  in XS Financial on September 5, 2024 and sell it today you would earn a total of  0.29  from holding XS Financial or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.69%
Values	Daily Returns

Atlanticus Holdings Corp  vs.  XS Financial

Atlanticus Holdings Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlanticus Holdings Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Atlanticus Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XS Financial

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days XS Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile essential indicators, XS Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Atlanticus Holdings and XS Financial

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

The idea behind Atlanticus Holdings Corp and XS Financial 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .