Correlation Between Navient Corp and Qudian

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

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

Diversification Opportunities for Navient Corp and Qudian

0.02

Correlation Coefficient

Navient Corp  Qudian

Significant diversification

The 3 months correlation between Navient and Qudian is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Qudian Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qudian 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 Qudian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qudian Inc has no effect on the direction of Navient Corp i.e., Navient Corp and Qudian go up and down completely randomly.

Pair Corralation between Navient Corp and Qudian

Given the investment horizon of 90 days Navient Corp is expected to under-perform the Qudian. But the stock apears to be less risky and, when comparing its historical volatility, Navient Corp is 2.06 times less risky than Qudian. The stock trades about -0.08 of its potential returns per unit of risk. The Qudian Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  314.00  in Qudian Inc on November 28, 2024 and sell it today you would lose (31.00) from holding Qudian Inc or give up 9.87% of portfolio value over 90 days.

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

Navient Corp  vs.  Qudian 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 latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Qudian Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qudian Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Navient Corp and Qudian

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

The idea behind Navient Corp and Qudian 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.