Correlation Between Navient Corp and SLM Corp

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

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

Diversification Opportunities for Navient Corp and SLM Corp

0.11

Correlation Coefficient

Navient Corp  SLM Corp

Average diversification

The 3 months correlation between Navient and SLM is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and SLM Corp Pb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp Pb 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp Pb has no effect on the direction of Navient Corp i.e., Navient Corp and SLM Corp go up and down completely randomly.

Pair Corralation between Navient Corp and SLM Corp

Given the investment horizon of 90 days Navient Corp is expected to generate 1.16 times less return on investment than SLM Corp. In addition to that, Navient Corp is 4.38 times more volatile than SLM Corp Pb. It trades about 0.04 of its total potential returns per unit of risk. SLM Corp Pb is currently generating about 0.18 per unit of volatility. If you would invest  7,250  in SLM Corp Pb on December 28, 2024 and sell it today you would earn a total of  319.00  from holding SLM Corp Pb or generate 4.4% return on investment over 90 days.

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

Navient Corp  vs.  SLM Corp Pb

Navient Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Navient Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

SLM Corp Pb

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLM Corp Pb are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental drivers, SLM Corp is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Navient Corp and SLM Corp

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

The idea behind Navient Corp and SLM Corp Pb 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.