Correlation Between Navient Corp and Sentage Holdings

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

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

Diversification Opportunities for Navient Corp and Sentage Holdings

0.21

Correlation Coefficient

Navient Corp  Sentage Holdings

Modest diversification

The 3 months correlation between Navient and Sentage is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Navient Corp and Sentage Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentage Holdings 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 Sentage Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentage Holdings has no effect on the direction of Navient Corp i.e., Navient Corp and Sentage Holdings go up and down completely randomly.

Pair Corralation between Navient Corp and Sentage Holdings

Given the investment horizon of 90 days Navient Corp is expected to generate 1.25 times less return on investment than Sentage Holdings. But when comparing it to its historical volatility, Navient Corp is 2.83 times less risky than Sentage Holdings. It trades about 0.01 of its potential returns per unit of risk. Sentage Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  191.00  in Sentage Holdings on December 29, 2024 and sell it today you would lose (12.00) from holding Sentage Holdings or give up 6.28% 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.  Sentage Holdings

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.

Sentage Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sentage Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sentage Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Navient Corp and Sentage Holdings

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

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