Correlation Between Navient Corp and Open Lending

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

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

Diversification Opportunities for Navient Corp and Open Lending

-0.01

Correlation Coefficient

Navient Corp  Open Lending

Good diversification

The 3 months correlation between Navient and Open is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Open Lending Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Lending Corp 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 Open Lending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Lending Corp has no effect on the direction of Navient Corp i.e., Navient Corp and Open Lending go up and down completely randomly.

Pair Corralation between Navient Corp and Open Lending

Given the investment horizon of 90 days Navient Corp is expected to under-perform the Open Lending. But the stock apears to be less risky and, when comparing its historical volatility, Navient Corp is 1.53 times less risky than Open Lending. The stock trades about -0.02 of its potential returns per unit of risk. The Open Lending Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  560.00  in Open Lending Corp on September 13, 2024 and sell it today you would earn a total of  53.00  from holding Open Lending Corp or generate 9.46% 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.  Open Lending Corp

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.

Open Lending Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Open Lending Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Open Lending may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Navient Corp and Open Lending

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

The idea behind Navient Corp and Open Lending 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.