Correlation Between Consumer Portfolio and Green Dot

Can any of the company-specific risk be diversified away by investing in both Consumer Portfolio and Green Dot 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 Consumer Portfolio and Green Dot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Consumer Portfolio Services and Green Dot, you can compare the effects of market volatilities on Consumer Portfolio and Green Dot 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 Consumer Portfolio with a short position of Green Dot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumer Portfolio and Green Dot.

Diversification Opportunities for Consumer Portfolio and Green Dot

-0.22

Correlation Coefficient

Consumer Portfolio  Green Dot

Very good diversification

The 3 months correlation between Consumer and Green is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Consumer Portfolio Services and Green Dot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Dot and Consumer Portfolio 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 Consumer Portfolio Services are associated (or correlated) with Green Dot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Dot has no effect on the direction of Consumer Portfolio i.e., Consumer Portfolio and Green Dot go up and down completely randomly.

Pair Corralation between Consumer Portfolio and Green Dot

Given the investment horizon of 90 days Consumer Portfolio is expected to generate 1.93 times less return on investment than Green Dot. But when comparing it to its historical volatility, Consumer Portfolio Services is 1.21 times less risky than Green Dot. It trades about 0.03 of its potential returns per unit of risk. Green Dot is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  935.00  in Green Dot on September 27, 2024 and sell it today you would earn a total of  137.00  from holding Green Dot or generate 14.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Consumer Portfolio Services  vs.  Green Dot

Consumer Portfolio

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consumer Portfolio Services are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Consumer Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Green Dot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Dot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Green Dot is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Consumer Portfolio and Green Dot

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

The idea behind Consumer Portfolio Services and Green Dot 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.