Correlation Between Oportun Financial and Navient Corp

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

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

Diversification Opportunities for Oportun Financial and Navient Corp

0.18

Correlation Coefficient

Oportun Financial  Navient Corp

Average diversification

The 3 months correlation between Oportun and Navient is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Oportun Financial Corp and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp and Oportun Financial 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 Oportun Financial Corp 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 Oportun Financial i.e., Oportun Financial and Navient Corp go up and down completely randomly.

Pair Corralation between Oportun Financial and Navient Corp

Given the investment horizon of 90 days Oportun Financial Corp is expected to generate 3.15 times more return on investment than Navient Corp. However, Oportun Financial is 3.15 times more volatile than Navient Corp. It trades about 0.13 of its potential returns per unit of risk. Navient Corp is currently generating about 0.01 per unit of risk. If you would invest  398.00  in Oportun Financial Corp on December 29, 2024 and sell it today you would earn a total of  163.00  from holding Oportun Financial Corp or generate 40.95% return on investment over 90 days.

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

Oportun Financial Corp  vs.  Navient Corp

Oportun Financial Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oportun Financial Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Oportun Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong basic indicators, Navient Corp is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Oportun Financial and Navient Corp

The main advantage of trading using opposite Oportun Financial and Navient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oportun Financial 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 Oportun Financial Corp 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.