Correlation Between Navient Corp and KYN Capital

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

By analyzing existing cross correlation between Navient Corp and KYN Capital Group, you can compare the effects of market volatilities on Navient Corp and KYN Capital 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 KYN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navient Corp and KYN Capital.

Diversification Opportunities for Navient Corp and KYN Capital

0.24

Correlation Coefficient

Navient Corp  KYN Capital

Modest diversification

The 3 months correlation between Navient and KYN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and KYN Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYN Capital Group 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 KYN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYN Capital Group has no effect on the direction of Navient Corp i.e., Navient Corp and KYN Capital go up and down completely randomly.

Pair Corralation between Navient Corp and KYN Capital

Given the investment horizon of 90 days Navient Corp is expected to under-perform the KYN Capital. But the stock apears to be less risky and, when comparing its historical volatility, Navient Corp is 4.19 times less risky than KYN Capital. The stock trades about -0.01 of its potential returns per unit of risk. The KYN Capital Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.09  in KYN Capital Group on September 2, 2024 and sell it today you would lose (0.01) from holding KYN Capital Group or give up 11.11% of portfolio value over 90 days.

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

Navient Corp  vs.  KYN Capital Group

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 recent stock price confusion, may contribute to short-horizon losses for the traders.

KYN Capital Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KYN Capital Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, KYN Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Navient Corp and KYN Capital

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

The idea behind Navient Corp and KYN Capital Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.