Correlation Between Nelnet and Patria Latin

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

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

Diversification Opportunities for Nelnet and Patria Latin

-0.52

Correlation Coefficient

Nelnet  Patria Latin

Excellent diversification

The 3 months correlation between Nelnet and Patria is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Patria Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Latin American 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 Patria Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Latin American has no effect on the direction of Nelnet i.e., Nelnet and Patria Latin go up and down completely randomly.

Pair Corralation between Nelnet and Patria Latin

Considering the 90-day investment horizon Nelnet Inc is expected to generate 6.89 times more return on investment than Patria Latin. However, Nelnet is 6.89 times more volatile than Patria Latin American. It trades about 0.03 of its potential returns per unit of risk. Patria Latin American is currently generating about 0.12 per unit of risk. If you would invest  8,758  in Nelnet Inc on October 9, 2024 and sell it today you would earn a total of  1,803  from holding Nelnet Inc or generate 20.59% 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.  Patria Latin American

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.

Patria Latin American

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Latin American are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Patria Latin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nelnet and Patria Latin

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

The idea behind Nelnet Inc and Patria Latin American 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.