Correlation Between Nelnet and Navient Corp

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

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

Diversification Opportunities for Nelnet and Navient Corp

0.18

Correlation Coefficient

Nelnet  Navient Corp

Average diversification

The 3 months correlation between Nelnet and Navient is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp 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 Navient Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navient Corp has no effect on the direction of Nelnet i.e., Nelnet and Navient Corp go up and down completely randomly.

Pair Corralation between Nelnet and Navient Corp

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.84 times more return on investment than Navient Corp. However, Nelnet Inc is 1.19 times less risky than Navient Corp. It trades about 0.12 of its potential returns per unit of risk. Navient Corp is currently generating about -0.07 per unit of risk. If you would invest  10,886  in Nelnet Inc on December 4, 2024 and sell it today you would earn a total of  1,146  from holding Nelnet Inc or generate 10.53% return on investment over 90 days.

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

Nelnet Inc  vs.  Navient Corp

Nelnet Inc

Risk-Adjusted Performance

OK

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.

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 latest uncertain performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Nelnet and Navient Corp

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

The idea behind Nelnet Inc and Navient Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.