Correlation Between World Acceptance and CorVel Corp

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

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

Diversification Opportunities for World Acceptance and CorVel Corp

0.48

Correlation Coefficient

World Acceptance  CorVel Corp

Very weak diversification

The 3 months correlation between World and CorVel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding World Acceptance and CorVel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CorVel Corp and World 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 World Acceptance are associated (or correlated) with CorVel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CorVel Corp has no effect on the direction of World Acceptance i.e., World Acceptance and CorVel Corp go up and down completely randomly.

Pair Corralation between World Acceptance and CorVel Corp

Given the investment horizon of 90 days World Acceptance is expected to generate 1.25 times less return on investment than CorVel Corp. In addition to that, World Acceptance is 1.8 times more volatile than CorVel Corp. It trades about 0.05 of its total potential returns per unit of risk. CorVel Corp is currently generating about 0.11 per unit of volatility. If you would invest  14,877  in CorVel Corp on September 2, 2024 and sell it today you would earn a total of  21,663  from holding CorVel Corp or generate 145.61% return on investment over 90 days.

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

World Acceptance  vs.  CorVel Corp

World Acceptance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in World Acceptance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, World Acceptance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CorVel Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CorVel Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, CorVel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with World Acceptance and CorVel Corp

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

The idea behind World Acceptance and CorVel Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.