Correlation Between Navient Corp and American Express

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

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

Diversification Opportunities for Navient Corp and American Express

-0.05

Correlation Coefficient

Navient Corp  American Express

Good diversification

The 3 months correlation between Navient and American is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and American Express in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Express and Navient Corp 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 Navient Corp are associated (or correlated) with American Express. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Express has no effect on the direction of Navient Corp i.e., Navient Corp and American Express go up and down completely randomly.

Pair Corralation between Navient Corp and American Express

Given the investment horizon of 90 days Navient Corp is expected to under-perform the American Express. In addition to that, Navient Corp is 1.39 times more volatile than American Express. It trades about -0.02 of its total potential returns per unit of risk. American Express is currently generating about 0.17 per unit of volatility. If you would invest  25,833  in American Express on September 13, 2024 and sell it today you would earn a total of  4,401  from holding American Express or generate 17.04% return on investment over 90 days.

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

Navient Corp  vs.  American Express

Navient Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navient Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

American Express

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navient Corp and American Express

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

The idea behind Navient Corp and American Express 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.