Correlation Between Nelnet and KYN Capital

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

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

Diversification Opportunities for Nelnet and KYN Capital

0.34

Correlation Coefficient

Nelnet  KYN Capital

Weak diversification

The 3 months correlation between Nelnet and KYN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and KYN Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KYN Capital Group 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 KYN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KYN Capital Group has no effect on the direction of Nelnet i.e., Nelnet and KYN Capital go up and down completely randomly.

Pair Corralation between Nelnet and KYN Capital

Considering the 90-day investment horizon Nelnet is expected to generate 2.64 times less return on investment than KYN Capital. But when comparing it to its historical volatility, Nelnet Inc is 6.46 times less risky than KYN Capital. It trades about 0.06 of its potential returns per unit of risk. KYN Capital Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.09  in KYN Capital Group on September 12, 2024 and sell it today you would lose (0.02) from holding KYN Capital Group or give up 22.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Nelnet Inc  vs.  KYN Capital Group

Nelnet Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nelnet Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Nelnet is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

KYN Capital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KYN Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, KYN Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nelnet and KYN Capital

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

The idea behind Nelnet Inc and KYN Capital Group 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..