Correlation Between Nelnet and Consumer Portfolio

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

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

Diversification Opportunities for Nelnet and Consumer Portfolio

-0.5

Correlation Coefficient

Nelnet  Consumer Portfolio

Very good diversification

The 3 months correlation between Nelnet and Consumer is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio and Nelnet 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 Nelnet Inc are associated (or correlated) with Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Nelnet i.e., Nelnet and Consumer Portfolio go up and down completely randomly.

Pair Corralation between Nelnet and Consumer Portfolio

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.63 times more return on investment than Consumer Portfolio. However, Nelnet Inc is 1.6 times less risky than Consumer Portfolio. It trades about 0.06 of its potential returns per unit of risk. Consumer Portfolio Services is currently generating about -0.11 per unit of risk. 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nelnet Inc  vs.  Consumer Portfolio Services

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.

Consumer Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consumer Portfolio Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nelnet and Consumer Portfolio

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

The idea behind Nelnet Inc and Consumer Portfolio Services 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.