Correlation Between Enova International and Nelnet

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

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

Diversification Opportunities for Enova International and Nelnet

-0.09

Correlation Coefficient

Enova International  Nelnet

Good diversification

The 3 months correlation between Enova and Nelnet is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enova International and Nelnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelnet Inc and Enova International 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 Enova International are associated (or correlated) with Nelnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nelnet Inc has no effect on the direction of Enova International i.e., Enova International and Nelnet go up and down completely randomly.

Pair Corralation between Enova International and Nelnet

Given the investment horizon of 90 days Enova International is expected to generate 2.16 times less return on investment than Nelnet. In addition to that, Enova International is 1.38 times more volatile than Nelnet Inc. It trades about 0.03 of its total potential returns per unit of risk. Nelnet Inc is currently generating about 0.09 per unit of volatility. If you would invest  10,563  in Nelnet Inc on December 28, 2024 and sell it today you would earn a total of  830.00  from holding Nelnet Inc or generate 7.86% return on investment over 90 days.

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

Enova International  vs.  Nelnet Inc

Enova International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enova International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Enova International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Nelnet Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nelnet Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Nelnet may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Enova International and Nelnet

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

The idea behind Enova International and Nelnet Inc 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 .