Correlation Between Qudian and Navient Corp

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

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

Diversification Opportunities for Qudian and Navient Corp

0.02

Correlation Coefficient

Qudian  Navient Corp

Significant diversification

The 3 months correlation between Qudian and Navient is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Qudian Inc and Navient Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navient Corp and Qudian 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 Qudian 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 Qudian i.e., Qudian and Navient Corp go up and down completely randomly.

Pair Corralation between Qudian and Navient Corp

Allowing for the 90-day total investment horizon Qudian Inc is expected to generate 2.06 times more return on investment than Navient Corp. However, Qudian is 2.06 times more volatile than Navient Corp. It trades about -0.03 of its potential returns per unit of risk. Navient Corp is currently generating about -0.08 per unit of risk. If you would invest  314.00  in Qudian Inc on November 28, 2024 and sell it today you would lose (31.00) from holding Qudian Inc or give up 9.87% of portfolio value over 90 days.

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

Qudian Inc  vs.  Navient Corp

Qudian Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Qudian Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 Qudian and Navient Corp

The main advantage of trading using opposite Qudian and Navient Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qudian 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 Qudian 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.