Correlation Between Navient Corp and Nelnet

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

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

Diversification Opportunities for Navient Corp and Nelnet

0.34

Correlation Coefficient

Navient Corp  Nelnet

Weak diversification

The 3 months correlation between Navient and Nelnet is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Nelnet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nelnet Inc 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 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 Navient Corp i.e., Navient Corp and Nelnet go up and down completely randomly.

Pair Corralation between Navient Corp and Nelnet

Given the investment horizon of 90 days Navient Corp is expected to generate 7.08 times less return on investment than Nelnet. In addition to that, Navient Corp is 1.1 times more volatile than Nelnet Inc. It trades about 0.01 of its total potential returns per unit of risk. Nelnet Inc is currently generating about 0.06 per unit of volatility. If you would invest  10,563  in Nelnet Inc on December 29, 2024 and sell it today you would earn a total of  601.00  from holding Nelnet Inc or generate 5.69% return on investment over 90 days.

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

Navient Corp  vs.  Nelnet Inc

Navient Corp

Risk-Adjusted Performance

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.

Nelnet Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nelnet Inc are ranked lower than 5 (%) 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 Navient Corp and Nelnet

The main advantage of trading using opposite Navient Corp and Nelnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navient Corp 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 Navient Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.