Correlation Between Nelnet and Thunder Bridge

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

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

Diversification Opportunities for Nelnet and Thunder Bridge

0.01

Correlation Coefficient

Nelnet  Thunder Bridge

Significant diversification

The 3 months correlation between Nelnet and Thunder is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nelnet Inc and Thunder Bridge Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Bridge Capital 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 Thunder Bridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Bridge Capital has no effect on the direction of Nelnet i.e., Nelnet and Thunder Bridge go up and down completely randomly.

Pair Corralation between Nelnet and Thunder Bridge

Considering the 90-day investment horizon Nelnet Inc is expected to generate 0.2 times more return on investment than Thunder Bridge. However, Nelnet Inc is 5.02 times less risky than Thunder Bridge. It trades about -0.12 of its potential returns per unit of risk. Thunder Bridge Capital is currently generating about -0.58 per unit of risk. If you would invest  10,830  in Nelnet Inc on October 9, 2024 and sell it today you would lose (269.00) from holding Nelnet Inc or give up 2.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	15.0%
Values	Daily Returns

Nelnet Inc  vs.  Thunder Bridge Capital

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.

Thunder Bridge Capital

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Thunder Bridge Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively uncertain fundamental indicators, Thunder Bridge reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nelnet and Thunder Bridge

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

The idea behind Nelnet Inc and Thunder Bridge Capital 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.