Correlation Between Popular Capital and Navient SR

Can any of the company-specific risk be diversified away by investing in both Popular Capital and Navient SR 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 Popular Capital and Navient SR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Popular Capital Trust and Navient SR, you can compare the effects of market volatilities on Popular Capital and Navient SR 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 Popular Capital with a short position of Navient SR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Popular Capital and Navient SR.

Diversification Opportunities for Popular Capital and Navient SR

0.06

Correlation Coefficient

Popular Capital  Navient SR

Significant diversification

The 3 months correlation between Popular and Navient is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Popular Capital Trust and Navient SR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient SR and Popular Capital 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 Popular Capital Trust are associated (or correlated) with Navient SR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navient SR has no effect on the direction of Popular Capital i.e., Popular Capital and Navient SR go up and down completely randomly.

Pair Corralation between Popular Capital and Navient SR

Assuming the 90 days horizon Popular Capital Trust is expected to generate 0.57 times more return on investment than Navient SR. However, Popular Capital Trust is 1.76 times less risky than Navient SR. It trades about -0.05 of its potential returns per unit of risk. Navient SR is currently generating about -0.07 per unit of risk. If you would invest  2,584  in Popular Capital Trust on November 29, 2024 and sell it today you would lose (47.00) from holding Popular Capital Trust or give up 1.82% of portfolio value over 90 days.

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

Popular Capital Trust  vs.  Navient SR

Popular Capital Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Popular Capital Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Popular Capital is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Navient SR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Navient SR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Navient SR is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Popular Capital and Navient SR

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

The idea behind Popular Capital Trust and Navient SR 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 Transaction History module to view history of all your transactions and understand their impact on performance.