Correlation Between Nelnet and KKR Co

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

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

Diversification Opportunities for Nelnet and KKR Co

-0.56

Correlation Coefficient

Nelnet  KKR Co

Excellent diversification

The 3 months correlation between Nelnet and KKR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Nelnet i.e., Nelnet and KKR Co go up and down completely randomly.

Pair Corralation between Nelnet and KKR Co

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.54 times more return on investment than KKR Co. However, Nelnet Inc is 1.84 times less risky than KKR Co. It trades about 0.11 of its potential returns per unit of risk. KKR Co LP is currently generating about -0.11 per unit of risk. If you would invest  10,406  in Nelnet Inc on December 18, 2024 and sell it today you would earn a total of  1,085  from holding Nelnet Inc or generate 10.43% 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.  KKR Co LP

Nelnet Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nelnet Inc are ranked lower than 9 (%) 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.

KKR Co LP

Risk-Adjusted Performance

Very Weak

Over the last 90 days KKR Co LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nelnet and KKR Co

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

The idea behind Nelnet Inc and KKR Co LP 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..